New-energy car sales could stall if subsidies go
Print Edition
THE market share of new-energy cars in China could go into “free fall” after 2020 if the government cancels all subsidies, Chen Hong, SAIC Motor’s chairman and a deputy to the National People’s Congress from Shanghai said in a suggestion to the government.
In 2018, the number of new-energy cars sold in China surpassed 1.2 million. However, Chen said, the sales are still largely policy-driven.
The Chinese government has been reducing its subsidies to consumers of new-energy cars, and plans to cancel all subsidies after 2020.
“The cost of batteries and the manufacturing of new-energy cars will go down with technical progress, but we estimate that by 2020 the cost of those cars will still be higher than traditional cars,” Chen said.
“The cancellation of subsidies could reduce the market share of new-energy cars in China by about 40 percent.”
Chen suggested that the government keep incentives for both manufacturers and consumers, especially tax cuts for consumers.
Chen cited OECD statistics from 2014 which showed that taxes for buying and keeping cars in China accounted for 40.5 percent of all taxes related to vehicles in China, while the percentage in the US, Japan, the UK and Germany was 35.3, 33.9, 25.2 and 16.7, respectively.
“The high tax burden in buying and keeping cars suppresses consumption, and in most developed countries, fuel consumption takes up a greater portion of taxes,” Chen said.
Also, in China, excise, vehicle and vessel taxes are classified solely on engine displacement and do not take emissions into account. Chen suggested that those taxes should be counted on the basis of emissions so as to encourage the use of more environment-friendly cars.
The government could also consider cutting income taxes for people who purchase new-energy cars as such a measure has yielded positive results in the US, he said.
For manufacturers, Chen suggested that the government cut value-added taxes on the new-energy car industry from 16 to under 10 percent, following the leads of Norway, Iceland and Austria.
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