Recently, the rumor that "the subsidy for electric vehicles in 2019 is one-third lower than that in 2018" is full of rumors. However, the China Automobile Association has already given a response, "no notice."

The rumor is rumored. It is an indisputable fact that the subsidies for new energy vehicles have fallen back. How much will be refunded in the next 2019? Is the subsidy completely withdrawn at the beginning of 2020 or at the end of 2020?

As early as 2014, Wan Gang, the vice chairman of the National Committee of the Chinese People's Political Consultative Conference and the Minister of Science and Technology, said that as China's electric vehicles enter the stage of complete market competition, subsidies for new energy vehicles will be withdrawn in 2020. Regarding the time node, the supervisors are not constantly repeating and emphasizing. Recently, in the 2018 Bairenhui Forum, the Minister of Industry and Information Technology, Miao Wei said, "Everyone is worried that the subsidy policy will be adjusted. In fact, this adjustment is imperative. If we all pile up to a one-time adjustment by the end of 2020, it is better than segmentation. The release of this adjustment pressure allows everyone to smoothly pass the impact of this decline."

In the face of subsidies, how should companies respond?

There is an old saying in China that “the blessings are dependent on each other”. The subsidy for the retreat should be an incentive and a challenge for enterprises, and should not be a disaster for “breaking grain”.

Since the subsidies for new energy vehicles began to decrease sharply in 2018, the data shows that the state subsidies for new energy vehicles have even decreased to 40%. New energy vehicle companies led by BYD, Yutong Bus and Zhongtong Bus have experienced a decline in performance. The net profit of automobiles, Haima Automobile and Ankai Automobile was a cliff-like decline. At the same time, the Waterma capital chain is broken and it takes hundreds of millions of dollars to resume normal operations.

Dr. Li Yong of CRRC Electric said that the subsidy retreat can actually force the improvement of enterprise technology, especially the improvement of key technologies and core technologies of new energy vehicles. This is the only way for the real development of the new energy auto industry. Therefore, the subsidy policy should be biased towards key component technologies, not for the entire vehicle, such as the technology to deal with the future decline.

Bai Jun, executive director of the Energy Research Institute of the International Cooperation Center of the National Development and Reform Commission, said that first of all, enterprises must be rational, because subsidies are an inevitable trend, and don't have any luck. And whether it is the new energy vehicle industry, or renewable energy, wind power photovoltaic subsidies are a distorted mechanism, but if the country does not have a little support, then the industry may start to develop hard. What needs to be clear is that the country hopes that all enterprises will be in full bloom. Therefore, enterprises must focus on the needs of consumers. The ultimate goal is to push the new energy industry into a more mature, healthy and self-circulating process.

In response to the subsidies and the competitive situation, BYD announced that it will enter the low-speed economical electric vehicle field and will develop small electric vehicles of less than 100,000 yuan. Beiqi New Energy will also use the lower-priced economical electric vehicles as the main products of the future. Directions, and the mileage of vehicles including Zhidou D2 and Chery eQ jumped from 155km and 151km in the first batch in 2017 to 255km and 251km respectively, reflecting the fact that micro-electric vehicle manufacturers have upgraded their original miniatures in addition to adjusting product structure. Electric vehicles continue to drive mileage to reduce subsidies.

Does the subsidy decline indicates that new energy vehicles are beginning to enter the stage of comprehensive marketization?

It is an indisputable fact that new energy vehicles have entered a comprehensive market. New energy vehicles that have been relying on subsidies and low-cost access to the market will face a reshuffle in the near future. After the subsidies have retreated, there will still be only a few companies in the market that will be able to stand firm in the market competition and dominate the field of new energy vehicles.

Under the catalysis of the decline in new energy subsidies and the stimulation of market demand, the market strategy of industry integration and independent brands is also rapidly changing. From June 1, 2010, the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, and the National Development and Reform Commission jointly issued a new energy subsidy policy. In the past eight years, China’s new energy vehicles have achieved rapid growth every year, according to the China Association of Automobile Manufacturers. According to the data, in the first five months of this year, the cumulative sales volume of new energy vehicles in China reached 328,000, a year-on-year increase of 141.6%. The China Automobile Association predicts that the total sales volume of new energy vehicles in China is expected to exceed 1 million this year. At the same time, various countries and regions have launched a timetable for the ban on fuel vehicles. In 2019, the city will popularize new energy taxis. Hainan plans to use new energy vehicles throughout the island by 2030. In addition, Tesla, Ningde era, etc., such a unicorn company, its business model has also been verified.

From the subsidy promotion stage to the market promotion stage, the future development trend of new energy vehicles can be relatively optimistic. Although there will be chicken feathers on the ground, it will not be a feather. The subsidy ebb tide will indeed bring some pressure to the new energy auto industry, but if the enterprise can go against the trend, the development of the new energy auto industry can be expected in the future.