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China’s Extended NEV Subsidies Offer Incentive for Tesla to Cut Prices
Published on: 2020-04-24
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ELEChina extended subsidies and tax exemptions for new-energy vehicles (NEVs) for two years but set the threshold at cars costing less than 300,000 yuan, posting a challenge for Tesla’s relatively expensive battery-powered cars.
 

NEV incentives that were due to phase out by the end of this year will be extended until 2023. Subsidies will be cut from a year earlier by 10% this year, 20% next year and 30% in 2022, according to a notice issued Thursday by the Finance Ministry.

XPengs P7 sedan on display at the Guangzhou auto showXPeng's P7 sedan on display at the Guangzhou auto show

China introduced NEV incentives a decade ago, spurring explosive growth in the market for battery electric, fuel cell, and plug-in hybrid vehicles. Since 2017, policymakers have been trimming the subsidies in hopes of putting the industry on a sustainable track and making it less reliant on state support.
 

Overall NEV sales dropped 4% year-on-year in 2019 to 1.2 million vehicles, the first annual decline ever. Entering 2020, the auto industry has taken a hit from the Covid-19 pandemic, which froze business and forced city lockdowns. In the first three months of 2020, overall NEV sales plunged by 56%, according to the China Association of Automobile Manufacturers.
 

The new standard also raises the requirements for the driving range and power efficiency of NEVs to qualify for the subsidies. The driving range of eligible vehicles will increase to 300 kilometers from 250 kilometers. A fully electric car with at least 300 kilometers of driving range will qualify for a 16,200 yuan subsidy. Many of the new cars launched by domestic car makers have a driving range of more than 500 kilometers.
 

For the first time, the finance ministry has imposed an annual cap on the number of vehicles that can get the subsidies. According to the notice, at most 2 million NEVs can receive the subsidies, compared with the 1.2 million sold in 2019.

teslaThe subsidies are also limited to locally made vehicles that cost less than 300,000 yuan, which means Tesla’s Model 3 made in China and sold for 328,000 yuan won’t qualify. Chinese electric car makers Nio and Lixiang Automotive also have models that cost more than 300,000 yuan.
 

Li Xiang, founder of Lixiang Automotive, said the limit could give Tesla an incentive to cut its prices. If Tesla lowers the price of its basic Model 3 to 300,000 yuan, the car could sell for a little more than 270,000 yuan after subsidies. This would deliver a “devastating blow” to domestic brands in the 200,000-400,000 yuan price range, Li said.

A man walks past cars at an assembly line producing electronic cars at a factory of Beijing Electric VehicleA man walks past cars at an assembly line producing electronic cars at a factory of Beijing Electric Vehicle

The new subsidies standard also gives an edge to cars with swappable batteries, a technology allowing drivers to quickly change out their electric vehicle’s battery rather than having to plug it in to recharge. Swappable batteries would potentially save time for drivers — one of the biggest complaints consumers have with electric cars, but cost more than plug-in batteries.
 

The 300,000 yuan cap won’t apply to cars with swappable batteries. Nio and BAIC BluePark New Energy Technology Co. have been testing battery-swap services.
 

新能源车补贴新政定了!设30万元门槛

2020年新能源汽车补贴政策终于落地,“新能源乘用车补贴前售价须在30万元以下(含30万元)”引发业界热议,设立30万元红线使特斯拉成众矢之的,补贴前售价超过30万元的特斯拉Model 3标准版或长续航版或将无法享受补贴政策。
 

理想汽车创始人兼CEO李想甚至公开表示:“新能源补贴新政策的30万门槛,估计是为了限制特斯拉而设计的,标准版可以把价格拉到30万,补贴后27万多。最后补贴也给特斯拉了,而价格下降又会打击20-40万售价的国产电动车。”
 

在此背景下,业内普遍预计,未来特斯拉部分车型或将下调至30万元以内,从而获得补贴。小鹏汽车董事长何小鹏4月24日也在个人微博表示,判断大概率年内国产Model 3长续航版补贴后会降价到27.75万元,比当前价格33.9万元下调6.15万元。何小鹏指出,在这个价位上,原来15-40万元售价的电动汽车竞争压力只都会明显加大,不会缩小,大家应都做好准备。但是对客户利好,对市场蛋糕做大利好。

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