Electric vehicle policy in China: recent trajectory and perspectives

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Abstract:

In order to decrease its dependency on imported oil , to mitigate carbon emissions and air pollution, especially in big cities, and to create a competitive basis in electric vehicles (EVs) and batteries, the Chinese Government – comprising the central government, provinces and some cities – since the early 2000s, started to promote New Energy Vehicles (NEV) sales by providing subsidies, tax exemptions, license plates and other incentives. As a result, China became the world’s biggest market for electric vehicles (EVs) in 2015. However, many policies have failed to promote the spread of EVs at the desired speed and to create an endogenous innovative system in this field. In 2012, the government announced its targets for Battery Electric Vehicles (BEVs) sales in China for 2015 and 2020: half million and five million, respectively. At the end of 2015, a little more than 200,000 BEVs were sold in China. But, in early 2016 the Chinese authorities discovered a large number of fraudulent registrations, mostly occurring in 2015, used to receive subsidies on EVs sold. After these poor results and the fraud problem in 2015, the Central Government began making corrections to its NEV policy, moving from consumer-focused incentives to a more complex policy, that included not only consumer incentives in a new form, but also targeting the development of new BEV technologies and new products by stimulating R&D and the creation of a powerful charging infrastructure. But, in 2016, the Ministry of Industry and Information Technology (MIIT) of China announced a 20% reduction in subsidies for “New Energy Vehicles” (NEVs) each year to "completely phase out" the program by 2020. At the same time, the government established quotas for manufacturers and provinces, imposing rising shares of EVs on total vehicle production. Under the demand-pull versus technology-push perspectives, the aim of this article is to discuss the failures of NEV policy in some areas, and its recent changes and repositioning by China’s Central Government. This analysis is based on information and data provided by the Ministry of Industry and Information Technology (MIIT) of China, the provincial authorities and also by the literature and press releases.