China may extend subsidies for electric-vehicle purchases beyond this year to revive sales in the world’s biggest market, people familiar with the matter said.
Policy makers have been discussing the possibility after China’s first annual decline in sales of new energy vehicles, according to the people, who asked not to be identified because the talks are private. The drop in demand came after the government trimmed subsidies for buyers last July to help streamline the industry and make it less reliant on state support. Though the talks predate the emergence of the coronavirus as a global threat, the outbreak has piled more pressure on the auto industry by causing production halts and keeping people away from showrooms.
Talks are at a preliminary stage and there is no guarantee the subsidies will be extended, the people said. As things stand, they are still set to be phased out at the end of 2020.
Prolonging the handouts would be beneficial to local EV makers such as BYD Co., BAIC BluePark New Energy Technology Co. and NIO Inc. as well as the likes of Tesla Inc., which last month started deliveries from its new Shanghai factory, its first outside the U.S.
ales of new energy vehicles including electric cars, plug-in hybrids and fuel-cell cars tumbled 54% in January from a year earlier and the wider auto market also shrank, according to China Association of Automobile Manufacturers. Those figures were largely before the coronavirus outbreak took hold and led to city-wide lockdowns and production halts.
The virus has brought the broader auto industry to a virtual standstill. China car sales plunged 92% during the first two weeks of February, according to the China Passenger Car Association. But the situation is expected to improve in the third week of February compared with the start of the month, PCA Secretary General Cui Dongshu said in an interview on Friday
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