Renewed and enhanced subsidies for energy-efficient vehicles in China

In order to increase the market share of clean, energy-efficient, advanced technology vehicles, the Chinese government offers various fiscal incentives (“market-pull” measures) to complement mandatory vehicle-efficiency standards. Over the past few months, the government has issued updates to two such programs. The first, led by the Ministry of Industry and Information Technology (MIIT) and aimed at promoting efficient internal combustion engine vehicles and conventional hybrids, offers subsidies to vehicles whose fuel economy performance significantly outperforms the current Phase III standard limit values. The second, led by the Ministry of Science and Technology (MOST) and MIIT, targets so-called new energy vehicles—especially battery electric vehicles—and offers subsidies based on vehicle range.

Both of these subsidy programs have been in effect in China for several years, but have now been updated and expanded, as described in detail in this policy update.