The new energy subsidy policy of 2018 releases local protection or is publicly transferred to the "underground"

Recently, the "Circular on Adjusting and Perfecting the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles" (hereinafter referred to as the "Subsidy for the 2018 Edition") was released. Apart from careful reading, the author found that the "Subsidy for 2018" places great emphasis on breaking down local protection and wording. Severe and specific methods are more resolute than before.

What are the local protection measures? Local directory or filing, restricting the issuance of subsidy funds, conducting repeated inspections of new energy vehicles, requiring production companies to set up factories locally, and requiring whole vehicle companies to purchase local parts and components, etc., “Subsidy No. 2018” clearly requires that no form be adopted anywhere. Protective measures include, but are not limited to the forms listed above.

In order to eliminate local protection, the "Subsidy No. 2018" requires all localities to treat all new energy automotive products listed in the "Vehicle Production Enterprise and Product Announcement" as equals, and implement support measures such as exemption from restriction, purchase restriction, and licensing of new energy vehicles. As for the existence of local protection, the “Subsidy No. 2018” also clearly stated that the penalty will be imposed. The central government will deduct the charging funds for charging infrastructure accordingly.

Among all the local protection measures, the local catalogue is particularly prominent. Places where small local catalogues have been published and detailed catalogues are published include Beijing, Shanghai, Tianjin, and Hainan. These places are the major promoters of new energy vehicles. The supplemental models are also mostly based on local companies, so it is relatively difficult for foreign car companies to get subsidies in the local market. Local protection is not limited to local catalogues. Shenzhen Municipality has stipulated that new energy vehicles sold locally must reach higher driving ranges and establish local business requirements.

Some experts told the author that the protection measures in various places are not the same, but the characteristics of local protection are obvious. Under the pressure of the new policy, the local protection will be removed from the local reforms, but the local protection will be presented in other forms. Where there are benefits, there are rivers and lakes. Under the pressure of the “Subsidy 2018” policy, these open local protection measures will be banned and may be transferred to the “underground”.

In fact, the same was true. On February 22, the Shanghai Municipal Commission of Economics and Information Technology and the Office of the Leading Group for the Promotion of New Energy Vehicles in Shanghai issued the “Notice on the 2018 Shanghai Operational Procedures for Encouraging the Purchase and Use of New Energy Vehicles”. There is no mention of the word "registration" or "category," but instead "new energy vehicle manufacturers and vehicle applications". However, the 2016 and 2017 versions of the “Notice on Shanghai's Encouraging the Purchase and Use of New Energy Vehicle-related Operational Procedures, etc.” clearly mention “new energy vehicle manufacturers and vehicle types for filing”. The release date of this policy in Shanghai was later than the "Subsidy 2018" policy and played a word game.

Some experts also told the author that the basic point of local protection is subsidy, and the use of local catalogues biases the subsidy funds to local enterprises. After the introduction of the new policy, the local catalogues will be cancelled sooner or later. However, local governments can use other alternatives, such as changing local subsidies to special research and development grants, and converting local subsidies to rewards.

Shortly after the “Subsidies for the 2018 version” was released, it was generally of great positive significance to get rid of local protection. There is no perfect thing in the world. There will be new local protection in the future operations. There will definitely be new measures to eliminate it.