In­spired by new pol­icy, new en­ergy ve­hi­cles on a roll

China Daily European Weekly - - BUSINESS - By ZHENG XIN zhengxin@chi­

Sales and pro­duc­tion of new en­ergy ve­hi­cles in China con­tin­ued to rise in the first half of this year and are ex­pected to sus­tain the growth mo­men­tum in the sec­ond half, an­a­lysts say.

The sales of new en­ergy ve­hi­cle in­creased by 111.5 per­cent year-onyear to 412,000 units in the first half, while pro­duc­tion rose by 94.9 per­cent to 413,000 units, ac­cord­ing to data from the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers.

Ac­cord­ing to Kou Nan­nan, se­nior as­so­ciate with Bloomberg New En­ergy Fi­nance’s ad­vanced trans­porta­tion sec­tor, the surge in new en­ergy ve­hi­cles dur­ing the first half re­flects “con­sump­tion in ad­vance”, a re­sponse to Beijing’s grad­ual re­duc­tion of sub­si­dies.

Kou ex­pects the growth rate to be less dras­tic in the sec­ond half. Man­u­fac­tur­ers, es­pe­cially those pro­duc­ing low-end prod­ucts, are likely to raise prices to avoid prob­lems due to de­cline in gov­ern­ment sub­si­dies.

“Those mak­ing high-end prod­ucts might main­tain their prices, as sub­si­dies for this sec­tor have ac­tu­ally in­creased this year,” he says.

Head­room for price cuts has been suf­fi­cient for cer­tain new en­ergy ve­hi­cles, es­pe­cially e-buses, as well as cost sav­ings through economies of scale and bat­tery tech­nol­ogy im­prove­ment.

Ac­cord­ing to a new pol­icy, sub­si­dies for new en­ergy ve­hi­cles with a driv­ing range be­low 150 kilo­me­ters stopped as of June 12, while ve­hi­cles with a driv­ing range of 150 km to 300 km will re­ceive min­i­mal sub­si­dies.

Bat­tery power/weight re­quire­ments for re­ceiv­ing sub­si­dies have been in­creased from 90 watt-hours/ kilo­gram to 105 whr/kg, ac­cord­ing to the new pol­icy re­leased by the Min­istry of Fi­nance.

Au­thor­i­ties have said sub­si­dies for new en­ergy ve­hi­cles will be re­duced in phases from 2017 to 2020, with tighter tech­ni­cal re­quire­ments.

In­dus­try in­sid­ers say the sub­sidy cut, which is meant to aid the in­dus­try’s

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