Today is the last day for potential NIO consumers to be able to enjoy higher amounts of subsidies.
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As 2022 approaches, several Chinese government departments have officially announced that state subsidies for new energy vehicles (NEVs) will be reduced by 30 percent in the new year.
Four ministries, including China's Ministry of Finance, said in an announcement today that subsidies for NEV purchases in 2022 will be slashed by 30 percent from 2021.
For areas including city buses, road passenger transport, cabs, sanitation, urban logistics and distribution, postal and express delivery, civil aviation and airports, as well as government departments, the NEV subsidies in 2022 will be slashed by 20 percent from 2021.
This in fact does not come as a surprise. The Ministry of Finance announced on April 23, 2020 that the country's subsidies for NEVs will be scaled back each year, saying that in principle the subsidies will be reduced by 10 percent, 20 percent and 30 percent from the previous year in each of the years 2020-2022.
The policy for 2020 mentioned that in principle, the annual subsidy scale is capped at 2 million units. However, the latest regulations released today do not mention that number, implying that the quantitative limit has been abandoned.
The latest policy maintains the same requirements for technical indicators including energy density, range and energy consumption of the vehicle's power battery system, according to the announcement.
It is worth noting that the Ministry of Finance in a separate announcement clarified that the policy will not continue to be implemented starting in 2023.
The NEV purchase subsidy policy for 2022 ends on December 31, 2022, and vehicles with license plates obtained after December 31, 2022 will no longer enjoy the subsidy, the announcement said.
NIO announced on December 1 its subsidy program for consumers who purchased their vehicles this month, allowing owners who placed orders this year but won't receive delivery until early next year to continue to receive the current subsidy amount. Today is the last day for potential NIO consumers to be able to enjoy higher amounts of subsidies.
Those who pay a deposit for the ES8, ES6 and EC6 by December 31, 2021, and receive delivery by March 31, 2022, will be eligible for the subsidy at the Chinese state subsidy rate for 2021, NIO said in a statement previously posted on its app.
Data released by the company showed that for individual customers who purchase a model with the 75-kWh standard range battery pack, they will still be eligible for a subsidy of RMB 16,200 ($2,545).
If a customer purchases a model with a 100-kWh long-range battery pack, they will still receive a subsidy of RMB 18,000.
In an interview with The Beijing News earlier this week, Grace Tao, Tesla's global vice president, said that with China's strong support, the NEV industry is growing at a rapid pace and competition will enter a phase where it's really about product strength.
The subsidy rollback does not mean that NEVs will become less competitive, but will instead promote a more mature industry, she said.
"This is good for the whole industry, for consumers," she said.