Electric cars take the spotlight in China’s post-coronavirus stimulus plans
- As China tries to recover from the impact of the coronavirus, making sure its plans for electric vehicles stay on track is one priority.
- While consumer confidence may take time to recover, government and commercial purchases are expected to drive the electric vehicle market in China this year as well.
- China’s electric vehicle start-ups have pressed ahead with getting production back online and launching new products. Some have also reported growing sales.
BEIJING – As China tries to recover from the impact of the coronavirus, making sure its plans for electric vehicles stay on track is one priority.
Soon after signs that the outbreak in China was under control, the central authority and local governments announced stimulus policies aimed at automobiles, particularly new energy vehicles.
In the last few weeks, NEV subsidies and tax break policies set to expire this year were extended by two years to 2022. Battery charging infrastructure – frequently cited as a reason for not buying an electric car – got an injection of 2.7 billion yuan. That would allow for a ten-fold increase in scale versus last year, according to state media.
Such efforts play into national ambitions, and supports the economic contributions of the overall automobile industry. The auto sector accounts for about 10% of China’s retail sales, and one-sixth of jobs, according to official figures for 2018 compiled by the Ministry of Commerce.
China also aims to increase the share of new energy vehicles in the market to a quarter in the next five years, up from just 5% last year, pointed out Jing Yang, director for corporate research at Fitch Ratings in Shanghai.
“The support of the (new energy vehicle) market is actually a long-term strategy for the central Chinese government,” she said, noting that since authorities began nurturing the industry several years ago, an entire value chain of manufacturers has arisen which depend on the growth prospects of the new energy vehicle market.
Tough first quarter
As China battled Covid-19 in the first three months of the year, production of new energy vehicles fell 60.2% from a year ago to 105,000, while sales dropped 56.4% to 114,000 vehicles, the Ministry of Industry and Information Technology disclosed at a press conference on April 23.
Overall auto sales declined 42.4% to 3.672 million vehicles, the ministry said.
“In terms of consumer response (to) the virus, the health emergency is being replaced in China to a certain extent with economic uncertainty,” Rupert Mitchell, chief strategy officer at Chinese electric car company WM Motor said in an April 15 interview. The company was founded in 2015 by a former Volvo and Geely executive.