China plans to cancel local subsidies for new energy vehicles next year

According to informed sources, the Chinese Ministry of Finance is drafting a policy to urge the local government to cancel the subsidies for new energy vehicles to address local protectionism and control government spending.

Informed sources said that local governments give local manufacturers tilt policy, resulting in local protectionism. One of the insider said the plan may be implemented as early as next year.

Chinese automakers rely on the government's help to increase the affordability of their electric vehicles. Absent any other measures to make up for it, the removal of these support policies could impact companies such as BYD and Beijing Automotive

as buyers will find the car expensive.

According to Cui Dongshu, secretary general of the National Passenger Car Market Information Association, the central government of China has spent 59 billion yuan (8.9 billion U.S. dollars) as of the end of 2015 to finance the purchase of new energy vehicles; it expects to spend another 83 billion yuan in 2016 and this year yuan.

According to the estimation of China Association of Automobile Manufacturers, the sales volume of new energy vehicles will be 700,000 units this year, which may increase by up to 50% by 2018 to over 1 million units.