Notice on Adjusting the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles

At the end of last year, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Science and Technology and the Ministry of Finance jointly issued the "Notice on Adjusting the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles" (hereinafter referred to as "Notice"), in terms of vehicle energy consumption and safety. Standards, battery performance and cruising range have set new thresholds for subsidized models, clearly suggesting that the total subsidy for new energy vehicles will be 20% lower than the 2016 policy, and the central financial subsidies for various types of vehicles will be lowered. In addition, the "Notice" requires local governments at all levels to subsidize each model no more than 50% of the central government subsidies.

"This subsidy policy is a retreat. The subsidy policy itself is a tool to help enterprises survive the difficult stage of the highest cost of industrial development, and should not be used for a long time." Wang Binggang, consultant of China Automotive Engineering Society, told China Economic Weekly "Reporter said that "China is the country that subsidizes the most energy vehicles, and continues to let this industry stay outside the complete market mechanism, and it is not good for its development." Wang Binggang believes that the subsidy retreat is related to the recent The carbon monoxide management measures proposed by the department are mutually "right-handed", and the intention behind them is to completely market new energy vehicles.

Beiqi New Energy Vehicle CFP

In fact, as early as 2015, the “Notice on the Financial Support Policy for the Promotion and Application of New Energy Vehicles for 2016-2020” issued by the four ministries and commissions has clearly stated that subsidies will be implemented for vehicles other than fuel cell vehicles, 2017-2018 The amount of subsidies for new energy will fall by 20% on the basis of 2016, and the amount of subsidies from 2019 to 2020 will fall by 40% from 2016. The subsidy retreat is only a prescribed action to be completed in accordance with the established guidelines.

It is worth noting that the "Notice" mainly lowered the central financial subsidy for new energy vehicles, new energy buses and plug-in hybrid vehicles, and the subsidies for new energy buses were reduced the most. The highest amount of subsidies is non-fast-charged pure electric buses with a length of more than 10 meters. The upper limit is 300,000 yuan, which is 200,000 yuan lower than the 2016 subsidy standard. For new energy buses with a length of 6 to 8 meters, the subsidy is up to 90,000 yuan, a drop of more than 70%. In addition, the Notice also changed the subsidy method to only consider the length factor of the bus body and consider the battery performance factor.

In the fraudulent scandals of some new energy auto companies exposed in the second half of last year, the five involved companies, such as Suzhou Jim West Bus Manufacturing Co., Ltd. and Henan Shaolin Bus Co., Ltd., all involved the fraudulent problem of new energy buses. Then, does the "Notice" intentionally carry out a strong "clean up" on the new energy vehicles in the "hardest hit" area?

In the "Notice" issued this time, the reward and punishment mechanism and security responsibility were clearly divided. “The new energy bus is indeed a problem-filled area. The New Deal has indeed imposed strict restrictions on it.” Wang Binggang told the China Economic Weekly that the new energy bus had the most subsidies before, and the central government Local finances will pay a subsidy of several million yuan for new energy bus vehicles. Such behavior should be limited accordingly. Jia Xinguang, executive director of the Automobile Circulation Association, believes that there is no need to over-interpret the subsidies for new energy buses. "The new policy stipulated in the Notice is comprehensive and is a new norm and threshold for the entire new energy vehicle industry. As for the new Energy buses, currently more than 2,000 companies are doing, it is indeed the most chaotic, rectification is a must."

In addition to the new energy buses that have been “focused on”, the subsidies for new energy passenger vehicles have also been reduced. The "Notice" stipulates that the subsidies for passenger cars are based on the battery life, and the models with a cruising range of more than 250 kilometers and between 150 and 250 kilometers and less than 150 kilometers can receive a central financial subsidy of 44,000 yuan. 36,000 yuan, 20,000 yuan, 20% lower than the 2016 subsidy policy. Previously, these three models were able to obtain another subsidy from the local financial equivalent in a 1:1 ratio. According to the new local government financial subsidies that can not exceed 50% of the central government's regulations, the passenger car with a cruising range of more than 250 kilometers, for example, a total of 110,000 yuan subsidy, the highest after the New Deal can only get 44,000 yuan +2.2 A total of 66,000 yuan of subsidies for 10,000 yuan, less than 44,000 yuan.

Will this reduction of 44,000 yuan subsidies be self-absorbed by manufacturers, or will it be passed on as a cost to consumers? At the beginning of the New Deal, Beiqi New Energy released information to the public, saying that before the Spring Festival of 2017, the new models of Beiqi New Energy will not increase in price, and the company will pay the corresponding difference in subsidies. However, such a price can only be maintained to the Spring Festival. "China Economic Weekly" reporter visited Beiqi New Energy Dealer. A person in charge of the store revealed that "price increases after the Spring Festival is inevitable. If the deposit is paid before the Spring Festival, it can be declared in accordance with the 2016 subsidy policy. The price is also in accordance with 2016. The year is counted."

Compared with the “persistence” before the Spring Festival in Beiqi, BYD (48.670, 0.32, 0.66%) is somewhat “unstoppable”. A person in charge of BYD said that it is imperative to raise prices. "If consumers can make a decision before the Spring Festival, BYD will pay for the 5,000-8,000 yuan gift package to make up for the price increase." Take the BYD e5 as an example. Even if the manufacturer's package of 5000~8000 yuan is obtained, the price increase will still exceed 30,000 yuan. "A price of more than 100,000 cars is 44,000 yuan. In our opinion, it is a small proportion. It is not as cheap as spending the money to buy a traditional fuel car." A consumer in the store knows the price of the car. After that.

Earlier, some sources said that some dealers first licensed some new energy vehicles, and then transferred the transfer fee of up to 5,000 yuan to consumers who want to buy a car, in order to avoid the price increase of up to 44,000 yuan. A person in charge of a 4S shop said that there is indeed room for such a practice, but the transfer fee should not be as high as 5,000 yuan. However, in order to avoid price increases, such transfer fees may have the possibility of sitting on the ground.

Is subsidy retreat a damaging injury to consumers buying new energy vehicles? Jia Xinguang believes: "There is no enthusiasm. New energy vehicles will encounter similar difficulties in the promotion of the whole world. There are still many work to be done to promote the application of new energy vehicles. We should not only focus on the subsidy policy." Shin Kong also said that battery performance and charging infrastructure are two major problems that new energy vehicles have not been able to solve so far, and are the main reason why consumers do not catch cold.

The government departments are clearly aware of these two issues, and the "Notice" also sets countermeasures. The New Deal sets the threshold for the battery performance of subsidized models: passenger cars with a battery density of more than 90Wh/kg can receive subsidies, and subsidies of 1.1 times that of 120Wh/kg can be obtained. Jia Xinguang told reporters that battery manufacturers have no problem in achieving the bottom line of 90Wh/kg in technology. In order to achieve 120Wh/kg for additional subsidies, they should also innovate in battery technology. “Innovation in electrode materials will definitely increase input costs, but once subsidies are obtained, it will help car companies to form scale advantages and form profits. This is a contradiction.”

Jia Xinguang is not optimistic about the provisions of the "Notice" to strengthen the construction of charging infrastructure. "As of now, there are already many documents on the construction of new energy vehicle charging infrastructure, but each time it is not implemented, charging piles. The parking problem involves the management of the public security department, which needs to be resolved by the four ministries and the public security department. It is very difficult to issue documents unilaterally."

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