China has released a breakdown of the subsidy settlements for new-energy vehicle (NEV) companies from 2016 to 2020, along with the allocation plan for 2021 to 2022, and the data helps illustrate how the industry landscape shifted during those years. According to data released by the Ministry of Industry and Information Technology (MIIT) earlier this month, over the seven years from 2016 to 2022, subsidies gradually moved from traditional state-owned enterprises to leading carmakers and emerging start-ups. A total of 1.65 billion yuan (US$230 million) in subsidies was disbursed between 2016 and 2020. The Beijing Electric Vehicle Co. emerged as the biggest winner, receiving about 556 million yuan, or a third of the total. Meanwhile, BYD received only 15.74 million yuan, and Tesla, which first applied for subsidies in 2020, received 3.59 million yuan – each sum accounted for less than 1 per cent of the total. The MIIT explained that several carmakers received less than their requested amounts due to non-compliant documentation or failure to upload required vehicle data. The subsidy plans for 2023-2024 have yet to be publicised. From 2021 to 2022, a clear shift in subsidy distribution began to emerge. BYD’s Shaanxi and Shenzhen subsidiaries were allocated 37.91 million yuan and 35.56 million yuan, respectively, while Tesla’s Shanghai subsidiary received 30.15 million yuan. Stellantis-backed electric vehicle (EV) maker Leapmotor was the only start-up to receive subsidies, totalling 2.76 million yuan. The data shows how subsidies increasingly favoured leading carmakers and select new entrants, signalling a transition from state-owned dominance to a more diversified market, said Zhou Lijun, director and chief researcher of auto industry analysis firm Yiche Research. Authorities will dynamically adjust NEV subsidy policies, with subsidies expected to gradually decrease, according to Zhou. “Subsidies will continue to decline, with plans to phase them out by around 2027, provided that NEV sales remain at or above half of total new vehicle sales,” he said. “If eliminating subsidies causes market share to fall below 50 per cent in the future, authorities may continue policy support to maintain the industry’s competitive edge.” The MIIT’s allocation plan for 2021-2022 called for 168 million yuan worth of subsidies, far below peak levels of 917 million yuan and 405 million yuan in 2017 and 2018, respectively. Nonetheless, China’s NEV market continues to grow. The China Passenger Car Association has raised its forecast for EV sales by 3.5 per cent to 16.1 million units in 2025, with a penetration rate exceeding 50 per cent, meaning that more than half of new vehicles in China will be new-energy vehicles. EV sales in China, the world’s largest automotive market, accounted for more than 60 per cent of all deliveries in 2024. For end consumers, China renewed a trade-in subsidy that spurred EV sales last year, keeping the size of the incentive unchanged to support carmakers, including Tesla and BYD. In January, the National Development and Reform Commission said that buyers of electric cars for replacement purposes would receive a 20,000 yuan (US$2,800) cash award this year. Consumers who buy petrol cars fitted with an engine smaller than two litres to replace their vehicles would be given 15,000 yuan. China’s NEV subsidy policy evolved from “universal” pre-2016 support, to technical thresholds from 2017 to 2020, to gradual reductions from 2021, with fuel-cell applications singled out in 2023, highlighting support for hydrogen energy. Driven by both government support and a willingness among consumers to embrace new technology, China’s NEV sales rose from 507,000 units in 2016 to 1,367,000 units in 2020, with an average annual growth of 38.2 per cent from 2021 to 2024, according to MIIT data. “It is projected that domestic sales will reach 16.5 million units [this year], with new-energy vehicles accounting for more than half of new vehicle sales, marking a shift from subsidy-driven growth to market-led expansion,” Zhou said.