China will keep subsidies for new energy vehicles in 2019

Electrifying personal transportation.

Chinese premier Li Keqiang has confirmed in the work report he delivered on Tuesday that his government will continue granting subsidies to new energy vehicle (NEV) buyers in 2019.

Rumors have been circulating that the Chinese government may cut or remove subsidies, resulting in a huge increase in the prices of NEVs, which include pure electric vehicles and hybrid automobiles.

Since 2013, China has implemented subsidies to encourage car buyers to shift to NEVs. The measure has been adjusted every year.

Under the policy, the central government and local authorities offer subsidies for selected plug-in vehicles. The amounts varied based on vehicle type, driving range, and other factors.

Last year, a car with a range of 400 kilometers or more and a battery energy density of 160 watt-hours qualified for the top-level state subsidy of RMB 50,000 (US$7,500). Buyers in Shanghai or Beijing would see an additional RMB 25,000 (US$3,700) knocked off the car’s sticker price.

Subsidies are viewed as one of the driving forces behind the country’s rapidly growing NEV sector, though automakers are concerned about a potential drop in sales if they are slashed.