China remains the largest market for electric cars in the world: the early adoption of these vehicles coupled with incentives are some of the reasons for its success.
The Asian country has tried on several occasions to turn off the tap, finding the same result over and over again: the slowdown in sales of electric cars. To regain momentum, the Ministry of Commerce is coordinating a six-month campaign that will use public funds to boost sales in rural communities.
The electric car, a matter of State
Sales of electric vehicles in China experienced record growth in 2022, with a 95% increase compared to 2021. We already know that when it comes to electric cars, China dominates the entire value chain, from the extraction of raw materials in the mines to the assembly of the car, through the manufacture of the battery to the software of the car.
But those sales have slowed, rising 41% from January to May 2023.
Something that the Government sees as insufficient given that in the same period last year, that percentage was already 120%. To remedy this, China will extend and optimize tax breaks for electrified vehicles.
According to Bloomberg, it will 'encourage' banks and other financial institutions to facilitate the financing of car purchases, especially electric vehicles.
This implies that banks will have to finance the end customer's purchase, while incentives will be offered to manufacturers. The objective is to stop boosting sales in large cities to do so in rural areas and to strengthen the electrical infrastructure in these areas.
The truth is that the big manufacturers are already lowering the price of their most popular models, such as the Hong Guan Mini from the Wuling brand.
Already in 2022, China began to recede in its purchase aid system due to the great demand for electric vehicles.
The high cost it entailed for public coffers, together with fraud problems, initiated a renewal of this incentive system in 2017, with higher technical standards and a gradual elimination of subsidies until 2020.
But the pandemic and the economic slowdown pushed the Asian giant to maintain this aid during 2023. The plan is to gradually eliminate it by 2030.
Or so they say.
Countries like Norway and Germany have also verified the double standards of purchase aid.
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