BEIJING: China will cut subsidies for new energy vehicles (NEV) such as electric cars by a fifth over the next year, the Treasury Department said Thursday, in an effort to tackle pollution and promote domestic champions in the automotive sector.
China, the world's largest auto market, has set a goal for NEVs, including plug-in hybrids and hydrogen fuel cell vehicles, to account for 20 percent of car sales by 2025, up from 5 percent now.
Global automakers such as Volkswagen AG, General Motors Co, Toyota Motor Corp and Tesla Inc are increasing production of electric vehicles in China.
Subsidies for NEVs for public transport, including buses and taxis, will be reduced by only 10 percent, the ministry added in a statement on its website.
China will also tighten regulations on new auto investment and manufacturing factories, the ministry added, to prevent overcapacity in the auto sector.
Steps are being taken to drive further consolidation in the auto industry and build a more comprehensive supply chain, the ministry added.
China will extend the subsidies and tax exemptions for NEV purchases through 2022. It is expected to sell 1.8 million NEVs next year, up from around 1.3 million this year.