(Bloomberg) — China’s electric vehicle industry received at least $231 billion in government subsidies and aid from 2009 to the end of last year, even as the amount of support per vehicle fell, according to new research .
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Just over half of the total amount of support was in the form of sales tax exemptions, according to research by Scott Kennedy, a China expert at the Center for Strategic and International Studies. The rest is made up of nationally approved buyer rebates, government funding for infrastructure such as charging stations, government purchases of electric vehicles, as well as R&D support programs, he wrote in a blog post.
The conclusions come shortly after the European Union announced that it will increase tariffs to up to 48% on vehicles imported from China to offset subsidies. This followed the US decision to quadruple tariffs on automobiles, while Canada is now preparing potential new tariffs, according to a Bloomberg report.
“Chinese EVs have benefited from massive industrial policy support and their quality is improving, making them attractive to consumers at home and abroad,” Kennedy wrote. “An effective response by the US, Europe and other countries must take both facts into account.”
He described the data as “highly conservative,” noting that it does not include local-level rebate programs in cities like Shanghai and Shenzhen designed to encourage conventional car owners to switch to EVs. It also does not include low-cost land, electricity and credit that some electric vehicle manufacturers can access and benefit from, and excludes support for battery companies and other parts of the supply chain.
Per vehicle, support has dropped from $13,860 in 2018 to just under $4,600 in 2023, or less than the $7,500 credit available to U.S. buyers of qualifying vehicles under the Inflation Reduction Act. according to the post. Sales tax exemptions were worth nearly $40 billion last year, rising from less than $10 billion in 2020 due to the rapid increase in EV sales.
“If Chinese EVs were junk parts, then they wouldn’t be a serious challenge to the rest of the world’s automakers,” Kennedy wrote. “In general, Western automakers and governments have been hesitant and not aggressive enough.”
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