Promoting the pace of development of new energy vehicles to get rid of subsidies depends on the key

The development, promotion, and widespread adoption of new energy vehicles are not only essential for reducing pollution but also a necessary step for human society to reduce its dependence on oil and prevent the overexploitation of fossil fuels. New energy vehicles are still in their early stages, and their future lies in advancing high-efficiency solar panels and fully utilizing solar energy—a renewable and inexhaustible resource. However, there are growing rumors that government subsidies for new energy vehicles will be phased out faster than expected, raising questions about whether these vehicles can eventually stand on their own without financial support. A recent image shows a typical new energy vehicle, highlighting the evolving landscape of this industry. While the exact details of subsidy reductions remain unconfirmed by official sources, many within the industry believe that the policy is gradually shifting. Car manufacturers now face the challenge of not just securing subsidies, but also developing competitive products that can thrive in a more market-driven environment. Thanks to consistent policy support and financial incentives, the new energy vehicle industry has experienced rapid growth in recent years. According to recent data, in the first 11 months of this year, production and sales reached 639,000 and 609,000 units respectively, marking a year-on-year increase of 49.7% and 51.4%. Pure electric vehicles remained the dominant force, with production and sales reaching 532,000 and 504,000 units, up by 56.6% and 59.4% compared to the previous year. Plug-in hybrid vehicles also saw steady growth, with 107,000 and 105,000 units produced and sold, respectively, representing increases of 22.5% and 21.8%. Since the second half of the year, commercial new energy vehicles have shown significant growth, with November sales hitting a record high of 36,000 units. The market for new energy vehicles has always followed a pattern of "low before and high after," and industry experts like Xu Haidong, Assistant Secretary-General of the China Automobile Industry Association, have expressed confidence that the annual target of 700,000 sales will be met this year. He even predicted that next year’s sales could exceed 1 million units. However, according to the policy announced last year, subsidies for new energy vehicles were set to decrease by 20% from 2016, and by 2019-2020, they would be reduced by an additional 40% from the 2016 levels, with full withdrawal by 2020. In response, Lu Huaping, an assistant to the Secretary-General of the All-China Federation of Political Parties, mentioned that the government is considering adjustments to the subsidy policy, with a focus on encouraging high-mileage and low-energy consumption models. Local subsidies may also be gradually phased out. Amid these developments, a draft document outlining the future direction of new energy vehicle subsidies has been circulating online. According to insiders, this document was shared during a small seminar and is currently under public consultation. Compared to the 2017 subsidy program, the new proposal introduces stricter criteria, including mileage-based categorization. Vehicles with a range below 150 kilometers will no longer qualify for subsidies, and those with ranges between 100-150 km will lose their 20,000 yuan subsidy entirely. Other tiers have also seen changes, with some reductions and others increases, aiming to push manufacturers toward producing higher-quality, more efficient models. Industry insiders believe that this shift is intended to eliminate weaker players and promote innovation. Many current electric vehicles lack real-world performance, and some companies may have relied too heavily on subsidies rather than building sustainable products. As Cui Dongshu, secretary-general of the National Association of Travel Unions, pointed out, 2018 marks a crucial turning point for the new energy vehicle industry. The reduction in subsidies will encourage consumers to choose vehicles that meet the new standards, while those that fail to comply may be pushed out of the market. This transition will raise the bar for the entire industry, forcing non-compliant companies to either adapt or exit.

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