China has revised its national vehicle trade-in subsidies for 2026, lifting the spending threshold for the highest rebate and reducing support for lower-priced manufacturers, reported Bloomberg.
Under the revised cash-for-clunkers scheme, buyers of eligible electric and hybrid vehicles can receive a 12% rebate capped at 20,000 yuan ($2,858).
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To qualify, they must scrap a gasoline car or EV registered before 2019 at an approved dismantling site.
Consumers who replace an older vehicle with a more fuel-efficient petrol model or switch to a newer EV will qualify for rebates of between 6% and 10%.
The subsidies are capped at 15,000 yuan, according to a Ministry of Commerce document.
To access the full 20,000 yuan incentive, the new vehicle must be priced at a minimum of 166,700 yuan.
The higher threshold is expected to favour more expensive models while weighing on mass-market brands such as BYD, Zhejiang Leapmotor Technology and Geely Automobile Holdings.
BYD’s average selling price stood at 107,000 yuan in November, according to China Auto Market data.
Although the extension of the scheme maintains policy backing for the sector, the revised terms introduce uncertainty over its ability to sustain demand in 2026.
Earlier-than-expected subsidy withdrawals in some regions this year contributed to an 8% fall in November auto sales, traditionally a peak period.
The pressure comes as tax incentives for EV purchases are gradually withdrawn from next year, adding to strains from overcapacity and an ongoing price war.
Under the previous rules, a buyer scrapping an old car to purchase a BYD Seagull hatchback priced from 69,800 yuan would have qualified for a 20,000 yuan rebate in 2025.
Under the new framework, the subsidy would drop to about 8,400 yuan.
The tighter criteria may also limit misuse of the programme, after some dealers purchased low-cost EVs in bulk and resold them as “zero-mileage” used cars to claim incentives, accelerating the depletion of funds in parts of China this year.
