China Extends Rebates for Electric-Car Purchases to Revive Sales

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China Extends Rebates for Electric-Car Purchases to Revive Sales

  • China has, as expected, announced it will extend incentives for EVs.
  • It will continue to waive the 10% sales tax (which was due to expire end of 2020) until end 2022 as well as keeping the direct subsidies (up to $3,500 per car).
  • There is some pressure from the car industry to waive the sales tax for the rest of the industry too.

Analysis and comments

  • This is not a surprising move in many analyst's views subsidies in China and most of Europe will continue until 2023 due to the imminent EV sales crash.
  • With battery costs currently still higher than the level required for EVs to breakeven with petrol vehicles, the extension of subsidies will help automotive OEMs to continue their electrification strategies in an economically viable manner over the next five years.
  • This decision stands in stark contrast to the US where Trump and the EPA have diluted down emission reduction targets for gasoline vehicles out to 2026 from on average 5% reduction pa to 1.5%. It is claimed it will save consumers $1,000 per car in a time of crisis and allow them to buy newer, safer cars. Kind of ignores the health impacts of an estimated 1bn tons of additional

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