This year, the upper limit of new energy vehicle subsidies will be relaxed, and A-class vehicles are expected to increase significantly

2022 will be the last year to implement the subsidy policy for new energy vehicles.

Recently, the Ministry of Finance and other four ministries and commissions issued the "Notice of the Four Ministries and Commissions on Improving the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles", and the subsidy standard for new energy vehicles in 2022 will be reduced by 30% on the basis of 2021, and new energy vehicles that are licensed after December 31, 2022 will no longer be given state subsidies. In addition, the notice mentioned that the price of new energy passenger cars must be less than 300,000 yuan (including 300,000 yuan) before subsidies, but the "power exchange mode" vehicles are exceptions.

As early as April 2020, the subsidy notice for new energy vehicles clarified the extent of the subsidy for new energy vehicles, in principle, the subsidy standards for 2020-2022 were reduced by 10%, 20% and 30% respectively on the basis of the previous year, and at the same time, it was clarified that the implementation period of the financial subsidy policy for the promotion and application of new energy vehicles was extended to the end of 2022, and the annual subsidy scale was capped at about 2 million vehicles in principle. From the content point of view, the subsidy policy is basically the same as the policy released in April 2020, but the latest policy does not mention the upper limit of the subsidy scale.

Cui Dongshu, secretary general of the Association, said that according to the latest released policy, the current purchase subsidy technical indicator system framework and threshold requirements will remain unchanged in 2022, and the subsidy scale will be relaxed from the original expected upper limit of 2 million subsidies to achieve subsidies throughout the year. The adjustment of the subsidy standard will inevitably promote the increase in sales.

According to the latest subsidy plan, pure trams with a range of 300km-400km in 2021 can enjoy a subsidy of 13,000 yuan, and in 2022, the subsidy will be reduced by 3,900 yuan; in 2021, pure trams with a range of more than 400km and priced at less than 300,000 yuan can enjoy 18,000 subsidies, and in 2022, the subsidy will be reduced by 5,400 yuan.

Affected by the subsidy decline policy, Tesla announced on December 31 that the price of the rear-wheel drive version of the Model 3 and Model Y was raised by 10,000 yuan and 21,000 yuan respectively. Because the price of the Model Y rises after the price of the whole series is higher than 300,000 yuan, it is unable to enjoy the national subsidy policy. Tesla's official website indicates on the order page that the product prices are all starting prices after subsidies, which are derived from the pre-subsidy starting price minus the estimated subsidy amount of new energy vehicles in 2022. If the price of the selected vehicle is higher than 300,000 yuan, it will not enjoy the above new energy vehicle subsidies, and the final subsidy amount shall be subject to the policy issued when the vehicle is delivered.

"There are only a few car companies that have increased prices, among which Tesla's price increase is obviously in short supply, and its price increase will not affect sales, because there is a contradiction between supply and demand." Zhang Xiang, an analyst in the automotive industry, told reporters that in general, there are fewer models with price increases, and most car companies dare not increase prices, because once the price increases, it will reduce a certain degree of competitiveness. Zhang Xiang analyzed that the price increase of new energy vehicles may also be related to the rise in raw material prices, which has led to an increase in battery costs. At the same time, the shortage of chips also has a certain impact on new energy best-selling vehicles, and some new energy vehicle companies have solved the contradiction between supply and demand through price increases.

In the past, due to the sharp decline in subsidies, the sales of new energy vehicles have been greatly affected. Taking 2019 as an example, since the implementation of the subsidy decline, the data released by the China Association of Automobile Manufacturers shows that since July 2019, the sales of new energy vehicles have begun to decline. In 2019, new energy vehicles fell by 4% year-on-year to 1.206 million units, which is far from the sales target of 1.6 million units in that year. However, new energy vehicles have grown rapidly in the past two years, and the new energy vehicle market has shifted from policy-driven to market-driven. According to data released by the China Association of Automobile Manufacturers, from January to November 2021, the cumulative sales of new energy vehicles reached 2.99 million units, an increase of 166.8% year-on-year. From January to November, the cumulative sales penetration rate increased to 12.7%.

According to a research report released by Guohai Securities, the decline was clearly mentioned in the new energy vehicle subsidy notice issued as early as April 2020, so many consumers bought in advance and had certain psychological expectations for future car price increases. The new energy vehicle market has shifted from policy-driven to market-driven, in the face of strong downstream demand, the subsidy decline has a limited impact on the overall market growth of new energy vehicles, and the overall growth of new energy vehicles in the future is still showing a state of steady growth.

Shengang Securities analyst Cao Xute believes that at present, new energy vehicles have entered the "demand-led" stage from "price-led", and consumers pay more attention to the use experience and convenience of new energy vehicles in licenses, restricted traffic policies, and electric intelligent functions. As the scale effect of electric vehicles gradually appears, long-term terminal prices are expected to remain stable. The subsidy policy has completed its historical mission of cultivating the market in the early stage, and China's new energy vehicles have recently entered a period of rapid development, and it is expected that China's new energy vehicle sales will reach 5.5-6 million in 2022.

For the impact of the decline in subsidies for new energy vehicles, Shengang Securities pointed out that the terminal price fluctuates in the short term but is stable in the long run. Tesla, FAW-Volkswagen, Weilai, Xiaopeng and other car companies after the subsidy decline to take price increases, make up the price difference and other countermeasures, short-term terminal sales prices may fluctuate, but with the gradual emergence of electric vehicle scale effect, long-term terminal prices are expected to remain stable. There is no change in the subsidy for short-range vehicles, and the low-end models are still good, and the performance of A00-A-class vehicles is optimistic. With the gradual listing of models for the A-class car market represented by BYD Dolphin and Nezha V, which are priced at 80,000-120,000 yuan in 2022, the A-class car market is expected to contribute considerable increments to the increase in the penetration rate of electric vehicles.

In Cui Dongshu's view, with the rise of scale, the cost will inevitably gradually decline, and the new energy subsidy will continue until the end of 2022, and its cost reduction pull effect will be obvious, driving the upgrade of the A00 level and the breakthrough of the main model of the A class.