China’s five key NEV policies issued during the first half of 2019

Shanghai (Gasgoo)- According to China Passenger Car Association, there were a total of 575,061 new energy PVs sold across China during the first half of 2019, a year-on-year increase of 65% despite the 12th-month-in-a-row downturn for the country’s overall automobile market (PVs mentioned here merely refer to China's locally-produced cars, SUVs and MPVs).

Chinese authorities also released a number of industrial policies in the first six months to boost the better and faster development of NEV industry. Gasgoo hereby summaries five key items in time sequence for your reference.

1. Taking various measures to boost automobile consumption, optimizing NEV subsidy structure

On January 29, the Implementation Plan for Further Optimizing Supply to Promote the Stable Consumption Growth and Facilitating the Formation of a Strong Domestic Market was jointly issued by the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Civil Affairs and other government agencies.

Highlights about NEVs are as described below:

(1) Orderly promoting the scrapping and updating of old and used motor vehicles. The "Five Main Parts" (engine, steering, transmission, front and rear axles, chassis) of scrapped motor vehicles shall be recycled and reused as required. Owners who obsolete a motor vehicle under the Stage 3 national emission standards or below and purchase a new one at the same time shall be given appropriate subsidies in eligible regions by relying on the market trading platform.

Places where remarkable results are achieved in the implementation of air pollution control measures such as the elimination and upgrading of old diesel trucks and the promotion and use of new energy vehicles shall be given appropriate preference and support by the central finance department in arranging the relevant funds.

(2) It is required to use more subsidies to support the sales of NEVs with advanced overall performance, encourage the development of NEVs with high technology levels, and implement the differentiated traffic management policy for new energy trucks to provide convenience for travel and expand the scope of travel.

(3) To optimize consumption market climate, it is necessary to continuously improve the infrastructures for consumption and accelerate the handling of weak links in roads, parking lots, energy, telecommunications, NEV charging facilities, etc.

2. New NEV subsidy policy issued with decreased amounts and stricter technical threshold

Chinese authorities on March 26 unveiled a tougher NEV subsidy policy to boost a high-quality development of NEV industry.

The new policy would steadily lift the energy density threshold for the NEV power battery system, moderately raise the energy consumption threshold for new energy complete vehicles and enhance the driving range threshold of all-electric PVs, China's Ministry of Finance said in a joint statement.

The statement showed that the subsidy for all-electric PVs would be given in accordance with only two mileage sections, compared with 5 sections for 2018 policy. The vehicles with NEDC-rated range between 250km and 400km would be offered RMB18,000 of subsidy. As for vehicles with range over 400km, subsidy would be halved to RMB25,000 compared to the 2018 policy.

Apart from the largely contracted subsidy amount, the latest policy also sets stricter requirements on NEV's top speed, energy density and energy consumption. For instance, new energy PVs qualified with subsidy must get a 30-minute top speed of at least 100km/h and an energy density of power system of no less than 125Wh/g.

The statement said that after a three-month grace period starting March 26, 2019, local governments should stop subsidizing the purchase of new energy vehicles (excluding new energy buses and fuel cell vehicles). The funds would be used to construct infrastructures, such as charging and hydrogen refueling facilities, and operate supporting services. If local governments maintain subsidies after June 25, the central government would reduce the funds accordingly.

3. Chinese authorities forbids purchase restrictions on NEVs

China's National Development and Reform Commission, Ministry of Ecology and Environment and Ministry of Commerce jointly announced on June 6 that local governments in China were not allowed to impose traffic and purchase restrictions on NEVs. Relevant restriction policies that have been implemented should be abolished from then on.

Chinese local governments were strictly prohibited to introduce policies to curb consumers buying NEVs. Some regions where purchase limitation had carried out should gradually unleash the NEV acquisition based on respective status, including urban traffic congestion, pollution abatement and traffic demand regulation, according to the announcement.

The authorities also encouraged local governments to offer support to those families who buy a NEV as their first household vehicle. NEV owners should be given parking fee relief in places with eligible conditions.

The document also urged to largely reduce costs on NEV R&D and utilization. China should expedite the R&D and industrialized application in the next-generation automotive power battery, lift the battery energy capacity and safety performance, so as to lower the battery development cost by gradually building a standard battery platform.

The convenience on using NEVs is another key issue that should be highlighted. Focusing on such pain points as short range and long charging time, companies should be inspired to research and develop NEVs featuring flexible battery installment and power refueling method combined with both battery charging and swapping by learning and using the battery swapping modes and application experience for public service. Facilities carrying technologies like high-power fast charging, wireless charging and mobile battery charging & swapping are encouraged to be researched and developed as well.

4. China annuls "white list" of recommended EV battery suppliers

China has scrapped the “white list” of recommended battery suppliers on June 21, China's Ministry of Industry and Information Technology (MIIT) announced on the same day.

Some foreign companies said this decision could open up the world's largest market for EV batteries, citing a report from Reuters. 

The MIIT issued in March 2015 the Standard Conditions for the Automobile Power Storage Battery Industry (hereinafter referred to as the Standard Conditions), saying from May 1, 2015, EV makers were allowed to voluntarily file an application via a specific management system and those who satisfied relevant conditions required by the Standard Conditions would be embraced into the Catalogue of recommended EV battery suppliers, namely, the aforesaid "white list"

The "white list" was significant to EV sellers for getting government's NEV subsidies. The Standard Conditions clearly stated that only the NEVs that used batteries offered by suppliers included on the “white list” were qualified to enter the Catalogue of Recommended Models for the Project of New Energy Automobile Popularization and Application, the prerequisite for EV makers to get subsidy.

From the time being, the MIIT has released four batches of list with a total of 57 enterprises involved. However, some Japanese and Korean battery giants such as Samsung, LG and Panasonic have not been eligible for entering the Catalogue yet.

5. Exemption of NEV vehicle purchase tax extended by another three years

China decided to continue executing the preferential policy about the vehicle purchase tax, according to an announcement jointly issued by China's Ministry of Finance and the State Taxation Administration on June 28.

NEVs purchased from January 1, 2018 to December 31, 2020 shall be exempt from vehicle purchase tax, said the announcement, which shall come into effect from July 1, 2019.

The exemption of vehicle purchase tax on NEVs was put into effect from September 1, 2014. Based on the original announcement, NEVs bought between September 1, 2014 and December 31, 2017 shall be free from vehicle purchase tax. Partly thanks to the policy, China’s NEV sales had been maintaining a relatively high growth rate in recently years. Now, the government determined to extend the validity period by another three years.

Besides, the newly-issued policy also provided that a student studying abroad who returns to and serve the country shall be exempt from vehicle purchase tax on one China-made car bought with foreign exchange for his own use. In addition, an expert who comes to China for long-term residence shall also be free from vehicle acquisition tax on a car imported for his own use.