Automakers respond to subsidy announcement

Automakers have responded in different ways to the government's announcement on subsidies for green cars. 

On Thursday, the finance ministry said subsidies on new-energy vehicles (NEV) will be cut by 10 percent this year, 20 percent in 2021 and 30 percent in 2022.

The government announced plans in 2015 to end subsidies this year, but said in March it would extend them to 2022. 

The decision was made due to the impact of COVID-19 and other factors. 

China sold 1.2 million new-energy vehicles last year, a decrease of 4 percent year on year. In the first three months of this year, sales dropped 56.4 percent to 114,000 units.

The ministry said the policy will minimize the impact of COVID-19, promote consumption, improve competitiveness and push forward high-quality industrial development.

Under the new policy, new-energy vehicle subsidies will apply only to passenger cars costing less than 300,000 yuan (US$42,372). That excludes premium electric vehicles such as those built by Germany’s Daimler and BMW.

Subsidies will still apply to new-energy vehicles with swappable batteries.

US electric carmaker Tesla has raised the price of its China-made Model 3 sedan to 303,550 yuan. 

Chinese electric vehicle maker NIO said all its models cost over 300,000 yuan. But its new-energy vehicles have swappable batteries as standard so government subsidies will still apply. 

NIO said buyers who pick up their vehicles before May 31 will still enjoy preferential prices with NIO making up the balance.

German carmaker Mercedes-Benz said consumers who bought its EQC electric vehicle will still enjoy a subsidy of 16,000 yuan. The vehicle is a premium electric car model and its suggested retail price is 579,800 yuan. Mercedes-Benz said it will make up the shortfall.

Cui Dongshu, secretary-general of the China Passenger Car Association, said the threshold of 300,000 yuan is reasonable and Germany had similar policies. The new policy will play an important role in promoting the development of new-energy vehicles, Cui said.