There's no doubt that new energy vehicle growth in China has been off the charts. Despite lackluster auto sales numbers heading into the backend of 2020, NEV sales continued to grow, rising 121% in November.
Additionally, the playing field of EV companies in China has become massive. The country leads the world in sheer number of major EV players, all jostling for position in what is still a burgeoning industry.
This saturation and sales growth could be why China's Ministry of Finance, along with several other ministries, has announced that subsidies for new energy vehicles (NEV) in China will be slashed 30% heading into 2022. The subsidies are expected to be phased out by 2023, CNEVPOST reported.
For some areas, like city buses, cabs and postal deliveries, subsidies will only be slashed by 20% heading into 2022.
But more importantly, "the policy will not continue to be implemented starting in 2023," the report said.
Grace Tao, Tesla's global vice president, told The Beijing News earlier this week that the NEV industry is has become more "mature" and that rolling back subsidies will place a focus on product strength.
"This is good for the whole industry, for consumers," she commented.
Recall, Chinese auto sales have fallen for the last seven months of 2021, we wrote in mid-December.
Sales were down 9.1% from the year prior as the industry continued to struggle with what is now becoming a year's long semiconductor shortage and the country posted total sales of 2.52 million vehicles in November, once again led by sales of new energy and electric vehicles.
Total new energy vehicles grew 121% to 450,000 units from the year prior, helped along by the government pushing to further rein in pollution. New energy vehicles include battery-powered electric vehicles, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles, Reuters wrote.
CAAM spokesperson Chen Shihua commented: "Consumer acceptance of new energy vehicles continues to rise. The market has shifted from policy-motivated to demand-driven."
Among the top sellers in China were Tesla, who sold 52,859 vehicles (which we highlighted analyst analysis of days ago) and Nio, who sold a record 10,878 cars last month. Xpeng sold 15,613 vehicles and Volkswagen sold over 14,000 of its ID series electric vehicles.