Analysts say that local authorities may grant cash subsidies to EV buyers to boost sales for the EV market industry.
After the EV industry was hit hard by Covid-19, China’s local governments are likely to reintroduce cash subsidies to boost the sales of electric vehicles—analysts say.
“Cash subsidies can give carmakers a shot in the arm and generate multi-billion-yuan sales,” said David Zhang, a researcher at the North China University of Technology. “Lockdown measures have caused severe damage to the once buoyant sector, and it is necessary to spur EV sales through strong incentives.”
Local governments had previously offered cash incentives to buyers but were ordered by Beijing to stop doing so in 2019.
China has had lockdowns in Shanghai and Changchun in the last two months. They have been the industry hub for mainland China’s motor industry, which has slowed down the supply chain. It is also deterring consumers from buying electric cars, threatening to knock down their automotive sector.
Guangdong’s government announced last weekend that those who will buy a new electric car to replace existing vehicles would receive a subsidy of 10,000 yuan (about $1,513) in May and June. They will also grant 5,000 yuan (about $756) to those who will buy petrol cars, as the government aims to support the whole automotive industry.
According to analysts, it is more likely that Jilin and local authorities in East China’s Yangtze River Delta, such as Shanghai, Jiangsu, and Zhejiang, will grant cash subsidies.
The vehicle industry is considered one of China’s biggest employers, which provides jobs for one in every six of its workforce of 800 people.
Tian Maowei, Sales manager with Yiyou Auto Service in Shanghai, said that “If the EV market in Shanghai cannot turn around after the citywide lockdown is lifted, dozens of dealers will have to close down, and thousands of industry employees will lose their jobs, Government support [to stimulate sales] is badly needed.”