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Electric cars in China

China won't end EV subsidies after cuts spark sales slump

New-energy vehicles are crucial to Beijing's global automotive strategy

State subsidies helped make China the largest market for fully electric autos and plug-in hybrids.   © Reuters

BEIJING -- China looks to extend the expiring subsidies supporting the purchase of electrified vehicles as the country hopes to reverse the recent decline in sales, a senior Chinese official said Monday.

Beijing had begun phasing out the subsidies for so-called new-energy vehicles, and the incentives are scheduled to conclude by the end of this year. But domestic sales of these autos dipped 4% in 2019 to 1.2 million units, the first annual retreat for the industry.

"The termination [of the subsidies] will probably be postponed for a little longer," Miao Wei, minister of industry and information technology, told reporters in Beijing. The government is expected to determine the length of the extension later.

Beijing rolled out the incentives in 2010 for new-energy vehicles, a category that includes fully electric autos and plug-in hybrids. Chinese sales of the vehicles climbed to 1.25 million units in 2018, or roughly 60% of global demand.

But the incentives cost the government billions of dollars a year, and Beijing slashed the subsidies by about half in June. Consumers responded by purchasing fewer new-energy vehicles, which jeopardized the government's sales goal of 2 million units for this year.

China, already the world's largest auto market, aims to become an automotive superpower and considers wider penetration of new-energy vehicles as essential to that objective.

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