China has indicated it will phase out remaining support for its electric vehicle industry by excluding new energy vehicles (NEVs) from its list of strategic emerging industries in the next five-year plan. Analysts say the decision marks a shift towards market-driven growth.
The move comes after more than a decade of state subsidies and tax incentives that propelled China to become the world’s largest EV market. NEVs , including battery-electric, plug-in hybrid, and fuel cell vehicles, were previously listed as strategic industries in three consecutive five-year plans, unlocking billions in subsidies that supported both automakers and consumers. That policy fostered homegrown champions such as BYD and battery maker CATL.
However, it seems the industry can stand on its own two feet. In September, for example, 1.6 million NEVs were sold in China, reaching a market share of 49.7 per cent. That is a new record. Moreover, battery electric vehicles also claimed a new record, exceeding the one million mark (1,058,000 units) for the first time. And all that even though China ended its national EV purchase subsidy scheme in 2022 and plans to phase out purchase tax rebates by 2027.
With these figures in mind, analysts believe that Beijing considers the industry to be mature enough to do without subsidies and leave further development up to market forces. (....)