China to reduce subsidies for new energy motor vehicles by a fifth following 12 months

Adds specifics, background

BEIJING, Dec 31 (Reuters) – China will slice subsidies by a fifth future 12 months on new energy autos (NEV) these types of as electric powered vehicles, the finance ministry mentioned on Thursday, as it seeks to combat air pollution and cultivate household-developed champions in the vehicle sector.

China, the world’s most significant vehicle market place, has set a focus on for NEVs, like plug-in hybrids and hydrogen fuel cell vehicles, to make up 20% of automobile revenue by 2025, up from 5% now.

World wide automakers this kind of as Volkswagen AG VOWG_p.DE, Common Motors Co GM.N, Toyota Motor Corp 7203.T and Tesla Inc TSLA.O are ramping up electric powered car creation in China.

Subsidies will be decreased by just 10% on NEVs for public transport, like buses and taxis, the ministry included in a assertion on its web-site.

China will also beef up restrictions on new auto investment and manufacturing factories, the ministry additional, in a transfer to prevent overcapacity in the vehicle sector.

It will just take actions to spur even further consolidation in the auto market and make a a lot more in depth offer chain, the ministry extra.

China will lengthen subsidies and tax exemptions on NEV purchases to 2022. It expects to sell 1.8 million NEVs up coming yr, up from about 1.3 million this yr.

(Reporting by Yilei Sun and Brenda Goh Editing by Clarence Fernandez)

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