China’s Ministry of Commerce said on Friday that consumers who replace old vehicles with either hybrid or electric cars in 2024 could receive subsidies of up to 10,000 yuan. This corresponds to approximately 1,381 dollars, or 15,245 kroner given today’s exchange rate. The Wall Street Journal writes.
Consumers who, on the other hand, choose to trade in older cars for traditional cars with engines of 2 liters and below are eligible for subsidies of 7,000 yuan, approximately NOK 10,887.
According to the newspaper, Chinese authorities are trying to increase consumption after domestic demand has fallen. For example, sales of passenger cars fell by 1.5 per cent year-on-year in April, after a growth of 6.2 per cent the previous month.
Analysts from Deutsche Bank commented that they expect the program to benefit low-cost cars, such as BYD, but that it does not help to solve the country’s “structural problems”.
Fear of overproduction
In February, Finansavisen wrote that Chinese electric car manufacturers had to focus more on sales abroad and challenge foreign car manufacturers, following the falling demand in the country.
According to the Wall Street Journal, this meant that the Chinese electric car manufacturers were determined to produce more cars than they are able to sell in their home country. Analysts commented in February that they are afraid that this could lead to overproduction.
Estimates from Bernstein Research expect car manufacturers in China to increase capacity by five million cars from 2023 to 2025, with sales of electric cars expected to grow by 3.7 million in the same period.
“There is a clear excess capacity in China, and this excess capacity will be exported. Especially if this is driven by direct and indirect subsidies,” said the head of the European Commission, Ursula von der Leyen, towards the end of 2023.
