Friday, June 5, 2020
Chinese Government Extends EV Subsidies by 2 Years
Subsidies Provided to Some EVs with Non-Chinese Batteries
Chinese Government Extends EV Subsidies by 2 Years
  • By Jung Min-hee
  • April 2, 2020, 09:26
Share articles

The Chinese government has decided to extend its electric vehicle (EV) subsidies by two years.

The Chinese government decided to extend its electric vehicle (EV) subsidies by two years to the end of 2022. South Korean EV battery manufacturers are expected to benefit as the Chinese government is expanding its subsidies to cover EVs equipped with batteries manufactured by non-Chinese companies.

The Chinese government’s decision is to protect local companies. It reduced the EV subsidies in June last year, and then the local EV sales volume dropped. Besides, Chinese automakers have taken a direct hit due to the spread of COVID-19. The China Passenger Car Association recently announced that the volume plummeted by 77 percent year on year last month. Last year, the volume showed a decline for the first time in 10 years.

Previously, South Korean battery manufacturers regarded the subsidy extension as a negative factor. More recently, however, the atmosphere has changed with the subsidies allowed for some non-Chinese vehicles. For example, Tesla and Mercedes-Benz cars were included in the subsidy list in December last year. Those cars are equipped with LG Chem’s and SK Innovation’s batteries, respectively. Those using LG Chem’s and Samsung SDI’s batteries were put on the same list last month, too.

At present, the South Korean companies are increasing their global market share at a rapid pace. According to market research firm SNE Research, the three companies’ market share topped 40 percent for the first time last month. Specifically, the use of LG Chem’s batteries more than doubled from a year ago to 1.7 GWh and its global market share jumped from 13.5 percent to 29.6 percent, the second-highest in the industry. Likewise, Samsung SDI and SK Innovation climbed a couple of notches in the global rankings with CATL’s market share dropping from 20.7 percent to 9.4 percent.