China's oil consumption could peak…
Crude oil prices continued to…
China is looking to raise its target to have new energy vehicles (NEVs) account for 25 percent of all car sales in 2025, up from a previous target of ‘over 20 percent’, but amid the massive subsidy cuts, the world’s largest EV market could find reaching the 25-percent share target a huge challenge, analysts say.
China’s Ministry of Industry and Information Technology has outlined a plan for the development of NEVs, proposing a target of 25 percent of all car sales in 2025 to be fully electric, hybrid vehicles, or hydrogen-powered cars, Reuters reports, citing the plan.
The previous target from a 2017 policy targeted “over 20 percent” share of NEVs of total car sales in 2025.
Last year, the sales of NEVs in China jumped by 61.7 percent to 1.256 million units, IHS Markit has estimated. Total Chinese car sales reached 28.1 million cars in 2018, according to data from the China Association of Automobile Manufacturers (CAAM) cited by Reuters. These sales numbers give NEVs a share of 4.6 percent of all car sales in 2018.
NEVs reaching 25 percent of all car sales could be an immense challenge for China, considering that Beijing has started to reduce subsidies for new energy vehicles.
China has heavily subsidized EV sales over the past decade, but has started to gradually decrease the subsidies in recent months, attempting to let EV makers compete for a share in the world’s biggest EV market.
Related: Meet The Biggest Losers Of The U.S. Shale Bust
Chinese car industry regulators are also said to be considering a further cut in subsidies, possibly from next year, in what could be another heavy blow to electric car sales, which have already seen lower registrations due to previous subsidy cuts.
But EV sales in China in July dropped after Beijing cut subsidies and as its economic growth slows amid the U.S.-China trade war. China’s cut in EV subsidies led to global EV sales dropping for the first time on record in July, analysts at Bernstein have estimated.
“The subsidies have been reduced to almost half their 2018 levels and the government has further raised the threshold for a vehicle to be eligible for the subsidies,” Nitin Budhiraja, Senior Analyst at IHS Markit, said on Tuesday.
“Reaching a target of 25% by 2025 will be a huge challenge for the Chinese authorities, considering the subsidies have been cut,” Budhiraja added.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.