China Increases Demands for Automakers Seeking NEV Incentives
China is ramping up its demands for automakers seeking new energy vehicle (NEV) incentives. The country is set to implement stricter requirements for these vehicles, focusing on efficiency and range. The changes are intended to align with advancements in technology and promote higher standards across the automotive industry.
New Regulations for NEV Incentives
According to CarNewsChina, significant changes to subsidy rules will take effect starting in late 2025. The Ministry of Industry and Information Technology, along with other government departments, are releasing new technical standards for NEVs, which include plug-in hybrids and battery-electric vehicles. The updated guidelines will be enforced for vehicles seeking purchase tax incentives in 2026 and 2027.
Increased Requirements
- NEVs must now have a minimum pure electric range of over 100 kilometers (62 miles).
- Stricter energy consumption standards will become mandatory.
- Battery electric cars must meet the revised national standard GB 36980.1-2025, which is 11% more stringent than previous rules.
- Plug-in hybrids need to cover at least 100 kilometers on electric power alone, up from the previous 43 kilometers.
Additionally, heavier vehicles that used to have relaxed energy consumption limits must now adhere to the same standards as lighter models.
Implications for the Automotive Market
Industry analysts predict that around 40% of current plug-in hybrids in China will not qualify for subsidies under the new regulations. This could lead to manufacturers offering substantial year-end discounts to clear out unsold models that fall short of requirements.
Performance of Existing Models
- Premium plug-in hybrids like the Aito M5 and BYD Tang DM-i typically exceed new benchmarks.
- Conversely, popular entry-level models such as the BYD Qin Plus and Geely Galaxy A7 may become ineligible for tax benefits.
The Growing NEV Market in China
Despite the tightening of incentives, NEV sales are soaring in China. In August 2023, NEVs captured nearly 48.8% of the entire new car market, marking a record high. This segment includes battery electric vehicles, plug-in hybrids, and fuel cell vehicles.
Positive Industry Trends
The Chinese government’s decision to enhance efficiency standards is seen as a beneficial policy that aligns well with the ongoing EV revolution. As China’s automotive landscape evolves towards electric transportation, manufacturers are expected to invest in research and development to meet the new criteria.
With these changes, China aims to strengthen its position as a leader in the global electric vehicle market while continuing to push for more sustainable transportation solutions.
