Fitch says Chinese electric vehicle sales to boom despite subsidy cuts

Booming growth in China’s electric vehicle (EV) market won’t slow because of Beijing’s drastic reduction in subsidies, according to Fitch Ratings.

Electric car sales in China jumped almost 62% in 2018 to 1.3 million vehicles, according to China’s Association of Automobile Manufacturers. The same organization sees electric vehicle sales hitting 1.6 million this year.

But the Chinese government has recently raised the bar for electric cars that qualify for subsidies and reduced the amount it is willing to provide to relevant companies.

New rules issued on March 26 will see central government subsidies totally removed for EVs with a range below 155 miles (250 km). More expensive electric vehicles with higher specifications will see the incentives slashed by as much as 60%.

At the same time, authorities have used law to pass the responsibility for pushing new energy vehicle sales away from government and onto car manufacturers based in China.

Chinese electric carmaker BYD Co, backed by Warren Buffet, saw its shares slump last week after admitting that the new rules had affected first-quarter sales.