China’s trade-in subsidy program for electric vehicles has been axed in at least six provinces because the money has run out, Bloomberg reported today, citing Chinese media.
The program involves offering car buyers an incentive to the tune of $2,780 for exchanging their internal combustion engine car for an electric model. It was originally planned to last until the end of the year.
However, car dealers have been buying new EVs in bulk and then selling them on the second-hand car market with zero mileage, the report explained, which has put a strain on the program funds. Per official data, some 70% of all personal vehicle buys in May took advantage of the trade-in incentive. Chinese authorities are studying ways to put an end to the fraudulent practice.
China is the world’s biggest market for electric cars thanks to its generous subsidy program. In May, the country booked a record in EV sales, at more than 1 million vehicles both at home and abroad. This drove global EV sales higher, to 1.6 million cars last month—up 24% on the year.
The EV industry had a difficult year in 2024 as key governments tried to phase out subsidies and let sales be driven by the market. They soon found out this was not happening and reinstated the incentives to keep people buying electric vehicles, reversing the sales decline.
Earlier this week, Shell reported that EVs are not gaining any ground with potential buyers—outside China—because of price issues that carmakers have consistently failed to overcome despite financial help from governments.
“While current EV drivers are feeling more confident, the relatively high cost of owning an electric vehicle, combined with broader economic pressures, are making it a difficult decision for new consumers,” Shell’s VP Mobility and Convenience, David Bunch, said as quoted by Bloomberg on Tuesday.
By Irina Slav for Oilprice.com
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Irina Slav
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
