Government may completely eliminate subsidies for electric vehicles by 2021

Subsidies will be reduced by 20 per cent per annum over the next four years, by 40 per cent between 2019 and 2020, and the subsidy policy will be completely withdrawn by 2021.

Lou Jiwei, China's finance minister, said the government insisted it would phase out subsidies for electric vehicles and abolish them completely by 2021, leaving the market to decide the direction of new energy cars.

However, car executives who attended the meeting with Mr. Lou gave different perspectives on the direction in which the market might favor: a Tesla electric car or a plug-in hybrid made by VW.

Sales of new-energy cars more than quadrupled in 2015, driven by government subsidies and preferential policies. China overtook the United States as the world's largest market for electric cars.

The government calls it a new-energy vehicle, which includes pure electric vehicles, hybrid vehicles and fuel-cell vehicles. The intention is to hope that Chinese car companies can compete across borders while reducing the pollution problems faced by many cities.

Lou reiterated that he will reduce subsidies by 20 % each year for the next four years, by 40 % in 2019-2020, and completely withdraw from the subsidy policy in 2021. An industry can not rely on government subsidies to achieve growth.

Instead, Mr. Lou said he would pursue market-based policies, praising California's emissions policy, which allows Tesla to earn green bonus points and resell the credits from the cars to other companies.

Californian policy is an example, and China does not have a similar system.

Lou Jiwei said: & Ldquo; Points trading is the most effective way to ensure that the government is in a neutral position in the development of technology. The market should be allowed to choose the technological path. &; rdquo;

Other car companies such as Beiqi Group and some start-up electric car companies such as NextEV also endorsed Tesla's industry development lead role.

Executives from VW and BMW, among others, say they will remain focused on the development of plug-in hybrids, which they see as the most feasible technology direction for China's transition to electric vehicles in the near future.

Haiziman, chief executive of Volkswagen China, said: Ldquo; Once we leave the city, we have to face the problem of a nationwide high-pressure charging infrastructure. If you really think this is a practical goal, I personally have doubts about driving an electric car for a long journey. &; rdquo;

Volkswagen prefers plug-in hybrids. Electric cars can be used to drive in cities. If you want to travel between cities, you should use gasoline engines.

BYD Chairman Wang Chuanfu predicted that buses may be fully electric, commercial cars may be completely electric within a decade, and cars will be completely electric by 2030.

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