CHINA is in talks with automakers about extending subsidies for electric vehicles (EVs) that were set to expire in 2022, aiming to keep a key market growing as the broader economy slows, three people familiar with the matter said.

Government departments, including the Ministry of Information and Industrial Technology (MIIT), are considering a continuation of subsidies to EV buyers in 2023, said the people, who declined to be named.

China’s incentive program has been credited with creating the world’s largest EV market. Since the subsidies began in 2009, some 100 billion yuan (US$14.8 billion) has been handed out to buyers including commercial fleet operators up to end-2021, according to an estimate by Shi Ji, an auto analyst with China Merchants Bank International.

The full terms of the 2023 extension, including the amount of the subsidies and which vehicles would qualify for them, have not been finalized, the people with knowledge of the matter said.

One specific measure under review would roll back a planned purchase tax increase for qualified electric and partly electric vehicles, two people briefed on the discussions said.

For this year, there is no purchase tax for such vehicles, but the government had planned to raise the tax to 10% of the purchase price in 2023. Instead, the rate would be raised to just 5%.

Subsidies have been available for cars made by all automakers including non-Chinese players like EV giant Tesla, which has a factory in Shanghai and is the only foreign automaker with a top-selling EV.

The EV subsidy scheme was originally scheduled to be phased out by the end of 2020, but the government extended it for two years to spur demand in the wake of the COVID pandemic.

China also cut the amount of subsidies per vehicle over the years as demand surged and manufacturing costs fell.

(SD-Agencies)