China's Ministry of Finance confirmed this week it would withdraw financial subsidies entirely for hydrogen fuel-cell electric vehicles (FCEVs) at the end of 2020, according to local reports.
The ministry was responding to suggestions made by Chen Hong, chairman of SAIC Motor and a National People's Congress deputy, the government should continue to support this emerging segment of the automotive market beyond the end of 2020 deadline.
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From the beginning of 2021, all subsidies will be withdrawn on all types of new, new energy vehicles (NEVs) which currently mainly comprise electric and hybrid vehicles. Thus, FCEVs will not be given special treatment by the government as had been hoped, even though they are a very early stage of development and despite negligible sales volumes at present.
Local sources suggested the Chinese government has set a goal of 5,000 FCEV sales annually by 2020, rising to 50,000 units by 2025 and 1m by 2030.
NEV subsidies have been slashed over the last few years with the latest cuts having taken place at the end of June – to around 25% of their original levels.
This pushed the NEV segment into reverse, with sales falling by 16% to 85,000 units in August and by almost 34% to 79,000 units in September – albeit compared with strong year earlier volumes.
This is the first time the ministry has specifically stated FCEVs will not enjoy financial subsidies beyond the end of 2020.
The government will rely on minimum sales quotas and other non financial measures such as refueling infrastructure development to achieve its long-term NEV sales target of around 60% of total passenger vehicle sales by 2035.
The ministry said some carmakers have become "over reliant on subsidies and will therefore find it difficult to compete in the global markets".
It added that despite financial support, China's fuel cell industry so far has not made any significant breakthroughs and has not enjoyed strong growth.
Hyundai-Kia and Toyota are seen to have taken a lead in the development of the hydrogen fuel cell segment while local companies such as SAIC Motor, Great Wall Motors and BAIC Group also have stepped up efforts recently to develop and produce fuel cell vehicles.
