China'S New Energy Vehicle Declined For The First Time In Ten Years: The Industry Strongly Appealed For No Further Decline In Subsidies In 2020.

The new energy vehicle market in China turned inflexion in 2019, and the annual sales volume of new energy vehicles was 1 million 206 thousand, down 4% year-on-year. This is the first time that China has vigorously promoted the development of new energy vehicles for ten years.

The reason for the negative growth is that besides the overall downside of the car market and the macroeconomic pressure, the biggest impact is due to the steep decline of new energy vehicle subsidies in the year of 2019. The rate of subsidy decline is more than 50%, and the new energy market has also started to enter the downstream channel since July 2019.

2020 is the key year for China's new energy automotive industry to shift from policy driven to market driven. How to adjust the subsidy policy will affect the smooth transition of China's new energy vehicle industry.

In fact, the discussion on the adjustment of subsidy policy is the focus of the January 10th China electric vehicle 100 person forum held on January 10th at -12.

Many participants expressed concern about the twenty-first Century economic report reporters. They believe that the impact of the 2019 subsidy downturn will exceed the expected level. If the subsidy goes down again in 2019, the new energy vehicle industry will encounter setbacks again.

"In July 1, 2020, subsidies for new energy vehicles will no longer go further." In January 11th, miu Wei, a minister of the Ministry of industry and commerce, said in a speech at the meeting, like a dose of reassurance, won a burst of applause from industry experts, business people and the media.

Ministry of industry and related stakeholders further explained that in order to stabilize market expectations and ensure the healthy and sustainable development of the industry, this year's subsidy policy for new energy vehicles will remain relatively stable and will not go down sharply.

Industry expects 2020 subsidy smooth transition

In the past ten years, with the vigorous promotion of financial subsidies, China's new energy vehicle industry has made breakthroughs from 0 to 1 million, becoming the largest new energy vehicle market in the world, and has achieved a certain first mover advantage.

Public data showed that since the announcement of the new energy vehicle subsidy and liquidation announcement on the website in 2016, the Ministry of industry and information technology has announced the liquidation of subsidies for new energy vehicles for the 6 time. The 6 subsidies and liquidation totaled 2015 yuan, 2016, and three yuan of new energy vehicles sold in three years in 2017, with a central subsidy of 62 billion 400 million yuan. If we calculate the subsidies for new energy vehicles that have not yet been reckoning in 2018 and 2019, it is initially estimated that the amount of central financial subsidies for new energy vehicles in China will exceed 100 billion.

"Subsidies play a key role in promoting the development of new energy vehicles. They are manifested in many aspects, such as technological progress, the enthusiasm of enterprises, and the formation of industrial chains. Over the past few years, the market has initially formed and infrastructure has been gradually improved. The incentive policy based on subsidy policy has well accomplished its historic mission. In January 12th, Wang Binggang, head of the new national energy automotive innovation engineering expert group, said.

However, the decline in sales of new energy vehicles in 2019 hit market confidence.

"The overall profit margin of our new energy vehicle industry is relatively low. Due to the decline in 2019, the whole industry is in a state of loss at present. It is difficult to make profits by selling new energy vehicles. At present, the new energy vehicle industry can not be completely marketization. " On January 13th, Chen Shihua, Deputy Secretary General of China Automobile Industry Association, said in an interview with the twenty-first Century economic report reporter.

According to the previous plan, China's new energy vehicle subsidies gradually decline, and will be completely withdrawn by the end of 2020. The current subsidy policy was formally implemented in June 26, 2019, less than half a year. As subsidy policy changes every year, car companies need to adjust their cost and R & D rhythm according to policy year by year.

On January 11th, Wan Gang, vice chairman of the CPPCC National Committee, made a speech at the China electric vehicle 100 person Forum (2020): "by the end of 2020, it is now a year's time. We feel that we should not make an intermediate subsidy policy, nor do we need to make any new adjustments to the products and technical indicators of subsidies."

He believes that the new energy vehicle industry needs to stabilize expectations, so that enterprises can devote more time and energy to product planning and R & D work after refunding, and more satisfy the market demand.

In fact, in January 10th, a closed door discussion was held at a hundred person forum, including a car dealer, industry experts and ministries and commissions.

A number of participating enterprises and industry experts told the twenty-first Century economic news reporter that they hoped to continue the subsidy policy in 2019 in 2020 and provide enterprises with a longer buffer period to ease operating pressure.

How do other policies continue?

From the perspective of market size and development trend, the complete withdrawal of financial subsidies for China's new energy vehicles is already in the firing line. The successful development of China's new energy vehicle market has also enabled Germany, the United States and Japan to increase their support for the new energy vehicle industry. The pressure of China's new energy automotive industry to maintain the first hand advantage is also increasing.

"In any country, any economy, any industry, any new technology and product can not survive for a long time." Zou Ji, CEO and chief executive of the Energy Foundation (China), said.

Wang Binggang believes that after 2020, we should further improve the design of the new incentive policy system, and continue to promote the rapid development of new energy vehicles in the case of subsidies and exit.

After the subsidy is withdrawn, relevant policies are needed to consolidate and develop the hard won momentum of China's new energy automotive industry.

"New energy vehicles in China are far from reaching the stage of sustained and rapid development driven by market forces. In order to make the penetration of new energy vehicles reach 25% in 2025, there will be enough subsidy substitution policies in the next few years. Xu Changming, deputy director of the state information center, said.

It is understood that the relevant departments strive to complete the formulation and release of the "2035 plan" in the first half of the year so as to achieve an organic convergence. In addition, as a continuation policy after the government subsidise, relevant departments will further improve the policy of double integration.

The double integral policy requires production enterprises to discharge fuel oil, and car companies need to offset the fuel consumption points by selling more new energy vehicles or buying new energy points from other car companies.

However, insiders pointed out that the dual integration policy only increased the enthusiasm of vehicle enterprises to develop new energy vehicles through production terminals. If we want to better promote the development of new energy vehicles, we need to provide more favorable policies to attract consumers to buy new energy vehicles.

Yu Junrui, executive vice president of Daimler Greater China, and global vice president of Land Rover, Jaguar Land Rover, said they hoped to maintain an appropriate amount of subsidy and tax reduction policy after the subsidy was completely withdrawn in 2020, thereby reducing user purchase costs and holding costs.

In addition, a number of business people suggested that departments concerned should continue to support the replacement of electric infrastructure so as to increase the convenience of users. In addition, the convenience of using new energy vehicles can be improved through parking fee concessions, toll concessions and relaxation of restrictions.

Of course, for the local new energy vehicle companies that rely on subsidies for a long time, while the government continues to provide policy support, with the strength of foreign brands, when it comes to competition with foreign brands, it is still necessary to improve their hard strength to harvest market cake.

After the withdrawal of the subsidy, the industry will encounter some difficulties, but this is the way to go. Only under the premise of full marketization can the industry develop healthily. Such a huge market can not rely on subsidies. "

In January 11th, Li Yujun, executive director of Beijing Automotive Technology and Engineering Research Institute, told reporters on twenty-first Century economic report that Beiqi new energy is looking for a way out through various ways and measures such as technological progress or new business model exploration.