China is seeing more new energy vehicles on the roads, from high-end luxury electric cars such as Tesla to local offerings from the likes of BYD, ROEWE and BAIC/BJEV. At the 14th China (Guangzhou) International Automobile Exhibition, there were a total of 1,130 cars on display, of which 146 were new energy vehicles; 49 domestic and 97 foreign. According to the China Association of Automobile Manufacturers, from January to October 2016, the output of new energy vehicles was 355,000. In October alone, they numbered 49,000.
The lure of such numbers, however, has resulted in a bout of misappropriation. The Ministry of Finance has so far punished five automakers for violating a program that subsidises part of the production of new energy vehicles; the most serious being Suzhou’s Gemsea. At the beginning of 2015, Gemsea applied for the subsidy but by the end of the year, registrations had already been made on a number of cars for which manufacturing had not even begun. The government has since recovered the money and slapped the company with an additional ¥259 million fine.
The Rise of New Energy Vehicles in China
While license plate restrictions on traditional vehicles in certain cities are pushing consumers to buy new energy cars which are not subjected thereto, and petrol in China is relatively expensive, government subsidised manufacturers are also making new energy vehicles more affordable.
There follows some of the policy highlights that support the development of new energy vehicles.
On 17 June, 2009 the Ministry of Industry and Information Technology (MIIT) formulated the Management Rules on Access to New Energy Vehicles Production Enterprises and Products, in order to promote the progress of automotive product technology.
On 14 July, 2014 the General Office of the State Council issued the Guidance on Speeding up Promotion and Application of New Energy Vehicles.
On 1 August, 2014 the Ministry of Finance (MF), the State Administration of Taxation (SAT) and the MIIT jointly issued the Announcement on Exemption of Vehicle Purchase Tax on New Energy Vehicles.
On 22 April, 2016 the MF, MST, MIIT and NDRC jointly issued the Notice on Promotion and Application of New Energy Vehicles from Year 2016 to 2020. The four Ministries and Commissions will continue to implement the policy of subsidy by giving grants for the purchase of new energy vehicles on a general preferential basis.
On 7 May, 2016 the MF, SAT and MIIT jointly issued the Notice of Vehicle and Vessel Tax Preferential Policies for Vehicles and Vessels Using New Energy in Order to Save Energy, in which tax for vehicles and vessels using new energy will be exempted.
In accordance with the Notice on Promotion and Application of New Energy Vehicles from Year 2016 to 2020 (except for fuel cell powered vehicles), subsidies shall eventually be cut. Between 2017 and 2018 subsidies shall decrease by 20 percent while between 2019 and 2020 they will decrease by 40 percent.
New Energy Vehicles will have a Bright Future in China
With subsidy policies to be phased out, only market-oriented automakers and suppliers, which devote themselves to technology research and development, product quality, reliability and consumer satisfaction, shall be able grasp opportunities for concession. With a tight hold on manufacturing grants, China is sure to soon see a surge in reliable, affordable eco cars on the road.
This article is intended solely for informational purposes and does not constitute legal advice. Although the information in this article was obtained from reliable official sources, no guarantee is made with regard to its accuracy and completeness. For more information please visit dandreapartners.com or WeChat: dandreapartners.