China introduces scrappage scheme to promote electric cars

The subsidy programme is essentially a scrappage scheme. Anyone who ditches an old car for a new one can receive state aid. In this case, the old one has to have a combustion engine and the new one an electric motor. Buyers will then receive 10,000 yuan (approx. 1,315 euros) towards purchasing a New Energy Vehicle (BEVs and plug-in hybrids). Alternatively, there is a grant of 7,000 yuan (900 euros) for buying a modern combustion engine vehicle with a maximum engine capacity of two litres. Participation in the subsidy programme is possible until 10 January 2025.

Analysts from Topsperity Securities assume that the measure will lead to additional sales of 400,000 to 800,000 BEVs and plug-in hybrids and 600,000 to 1.2 million cars with combustion engines. Based on an average sales price of a new vehicle of 170,000 yuan (just under 22,000 euros), the replacement of old vehicles is likely to generate additional sales of up to 340 billion yuan (just under 43.8 billion euros) in the automotive industry, according to Topsperity Securities.

To qualify for the subsidy programme, buyers must dispose of relatively old cars. For cars with petrol engines, the first registration must have taken place on 30 June 2011 at the latest. For diesel cars, the deadline is 30 June 2013.

Update 26 July 2024

The Chinese government is doubling the amount of the scrappage incentive introduced just three months ago for switching to an electric car to 20,000 yuan, which is equivalent to around 2,540 euros.

As Gao Shen, an analyst from Shanghai, told the South China Morning Post, the 10,000-yuan bonus is said not to have been enough to increase the number of deliveries, as would have been expected by “senior officials.” However, Beijing is also increasing the subsidy to boost consumption in general after China’s economy grew slower than expected in the second quarter.

cnevpost.com, scmp.com (update)