(Bloomberg) — China’s electric vehicle industry received at least $231 billion in government subsidies and aid from 2009 to the end of last year, even as the amount of aid per vehicle has declined, new research shows.
Most read from Bloomberg
Just over half of the total aid amount consisted of sales tax exemptions, according to the research by Scott Kennedy, a China specialist at the Center for Strategic and International Studies. The rest consists of nationally approved buyer rebates, government funding for infrastructure such as charging stations, government purchases of electric vehicles and R&D support programs, he wrote in a blog post.
The findings come just after the European Union announced it will raise tariffs of up to 48% on vehicles imported from China to offset subsidies. That followed the US decision to quadruple tariffs on cars, while Canada is now preparing potential new tariffs, according to a Bloomberg report.
“Chinese EVs have benefited from massive industrial policy support, and their quality is improving, making them attractive to domestic and foreign consumers,” Kennedy wrote. “An effective response from the US, Europe and others must take both facts into account.”
He described the data as “very conservative” and noted that it does not take into account rebate programs at the local level in cities such as Shanghai and Shenzhen, which are intended to encourage owners of conventional cars to switch to electric cars. It also doesn’t include the cheap land, electricity and credit that some EV manufacturers can access and benefit from, and excludes support for battery companies and other parts of the supply chain.
On a per-vehicle basis, aid has fallen from $13,860 in 2018 to just under $4,600 in 2023, or less than the $7,500 credit available to U.S. buyers of eligible vehicles under the Inflation Reduction Act, the release said. Sales tax exemptions were worth nearly $40 billion last year, rising from less than $10 billion in 2020 due to the rapid increase in electric vehicle sales.
“If Chinese EVs were pieces of junk, they wouldn’t pose a serious challenge to the rest of the world’s automakers,” Kennedy wrote. “In general, Western car manufacturers and governments have been busy and have not been aggressive enough.”
Most read from Bloomberg Businessweek
©2024 BloombergLP
