New energy subsidy period extended, standards reduced

Recently, the Ministry of Finance and other four ministries and commissions jointly issued the "Notice on Improving the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles" (hereinafter referred to as the "Notice"). The "Notice" proposes to extend the implementation period of the financial subsidy policy for the promotion and application of new energy vehicles to the end of 2022, and the subsidy standards for 2020-2022 will be reduced by 10%, 20%, and 30% respectively on the basis of the previous year.

The above subsidy policy will be implemented from April 23, 2020, and the transition period will be from now to July 22, 2020.

Among them, the biggest difference between the 2020 subsidy policy and the previous ones is that for the first time, it stipulates that after the transition period, vehicles with a selling price of more than 300,000 yuan will not be eligible for subsidies. In addition, the "Notice" also sets an annual subsidy cap of 2 million vehicles, and also increases the mileage threshold for vehicles eligible for subsidies from 250 kilometers to 300 kilometers.

In this regard, Cui Dongshu, secretary general of the China Passenger Car Association, said that this policy is a major boon to the development of new energy vehicles, and the sales of new energy vehicles this year are expected to challenge the expectation of 1.6 million units. Moreover, such a decline in the pace is of great significance, and it also reflects the country's firm attitude in supporting the continued development of new energy vehicles in 2020. This policy is a major boon to the development of new energy vehicles, and the sales of new energy vehicles this year are expected to challenge the expectation of 1.6 million units.

Another thing worth noting is that the new subsidy policy has set a subsidy price threshold for the first time.

Li Xiang, CEO of Ideal Auto, objected to this. He said on Weibo: "The 300,000 yuan threshold is probably designed to restrict Tesla , but it gives Tesla a reason and necessity to cut prices. The standard version can bring the price to 300,000 yuan, and more than 270,000 yuan after subsidies. In the end, the subsidies also go to Tesla, and the price reduction will hit domestic cars priced at 200,000-400,000 yuan."

Cui Dongshu expressed his support: "First, we need to improve the efficiency of subsidies, subsidize mainstream products, and reduce subsidies for luxury and high-premium products. At the same time, it will help new energy vehicles improve their price competitiveness and achieve parity with the price system of traditional vehicles. Ultimately, it will increase the speed at which new energy vehicles replace traditional fuel vehicles and accelerate the penetration rate of new energy vehicles."

Regarding setting price thresholds, the official interpretation of the Ministry of Finance is that it draws on the practices of the United States, Germany, Britain, France and other countries, in order to avoid a large amount of subsidy funds flowing into luxury consumption, and requires subsidized prices by comprehensively considering factors such as the purchasing power of my country's consumers and industrial development.