China sticks to the plan - scraps electric vehicle subsidy in 2023
Andrii Yalanskyi/iStock via Getty Images


December 31st of last year, China reduced the electric vehicle subsidy from ~$3,500 per vehicle to $2,830 (~20%); starting Jan 1, 2022 China will reduce the EV subsidy by a further ~30%; in 2023, China will no longer subsidize the purchase of new-energy vehicles according to a government statement on the website of the Ministry of Finance (NYSE:NIO).

According to research firm JATO Dynamics, the average cost of an EV in China is less than $30k, suggesting the subsidy financed upwards of 10% of the purchase price in 2020.
The Chinese subsidy is only available to vehicles costing less than ~$42k, and was expected to expire in 2020, prior to being extended for an additional two-year period.
In the US, the average EV costs ~$55k (NASDAQ:TSLA)
(NASDAQ:NKLA)
(NASDAQ:RIVN), and in the proposed Build Back Better legislation, EV buyers will be eligible to claim up to a $12,500 tax credit following an EV purchase; though this subsidy equates to ~20% of the purchase of an average EV in the US, a minority of households earn enough in any given year to benefit from the full credit.

China sees transportation-linked oil demand peaking in 2025 without subsidizing electric vehicles (NYSEARCA:USO), demonstrating confidence in the Country's ability to deliver vehicles and electricity at a competitive cost.