(NewsNation) — China plans to pay drivers almost $1,400 to replace their old cars with new energy-efficient ones after the country’s electric vehicle sales slowed to start the year.
Consumers can receive up to 10,000 yuan, roughly $1,380, depending on the type of car they replace, China’s Ministry of Commerce and other departments said in a joint statement Friday.
The offer — a one-time trade-in payment — runs until the end of 2024 and marks the latest effort by Chinese policymakers to stimulate the economy, which has struggled to bounce back from the COVID-19 pandemic.
Earlier this month, China’s central bank revised car loans to promote trade-ins. That change enabled financial institutions to independently determine the lowest payments they would accept on personal auto loans, scrapping minimums that had previously been set by the government, Reuters reported.
China also unveiled a $72 billion package of tax breaks last June, which aimed to boost EV sales in the world’s largest car market. Those policies and other green energy subsidies have helped stimulate the nation’s domestic EV sales even amid tight consumer spending.
In March, for example, sales of battery-electric and plug-in gasoline-electric hybrid cars surpassed those of gasoline-powered cars in China’s 35 largest cities for the first time, according to the New York Times.
Government subsidies have also benefitted Chinese automakers, and some, including Elon Musk, think those companies could flood the global EV market without additional trade barriers. Last year, Chinese carmakers produced more than half of all EVs sold worldwide, the Daily Telegraph reported.
China’s hypercompetitive EV market has led to a price war, with major automakers like Tesla and Li Auto slashing prices there this week. In April, prices were cut or incentives offered on more than 40 EV models in China, according to the Wall Street Journal.
For now, China’s cheap EVs, which cost as little as $10,000, aren’t available in the U.S.
However, EV buyers in the U.S. are eligible for government subsidies via the Biden administration’s clean vehicle tax credit, which tops out at $7,500. Starting this year, the tax credit became redeemable as a point-of-sale rebate, meaning dealers can knock the price down instantly.
You can find out whether the EV you’re interested in qualifies for the tax credit here.
