The Commerce Ministry has announced that drivers in China who trade in their old car for a newer model can receive a subsidy of up to 10,000 yuan ($1,380 or ₹1,15,096).
With over 100 domestic automakers striving to create the future clean car, China is both the largest and most competitive market for automobiles worldwide.
However, a downturn in the economy has hurt consumer spending and fueled a war of prices among manufacturers, which has hurt their bottom line.
To boost demand, Beijing is offering the subsidy to drivers who trade in an electric or hybrid vehicle registered before 2018, or a gasoline-powered car that doesn’t meet certain national emissions standards.
Those who replace a vehicle purchased after 2018 will be eligible for a subsidy of 7,000 yuan ($960), the commerce ministry said in a statement Friday.
The measure, in force until the end of the year, applies to all purchases of new electric or hybrid vehicles.
Its announcement coincides with the China Auto Show, where Chinese brands are stealing the show from foreign manufacturers struggling to make the transition to electric vehicles.
The choice was made at a time when many Western nations are placing more scrutiny on Chinese automakers.
Under pressure from France, which hosts a number of venerable automakers, the European Commission has opened an inquiry into Chinese government subsidies for the electric vehicle industry and has threatened to impose customs levies in order to safeguard the European market.
In general, the US opposes subsidies if it believes that they will cause “overcapacity” in production and hurt international competition.
China autos may pose a threat to national security, which worries Washington as well.
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