China has launched a six-month campaign aimed at boosting car purchases and promoting the adoption of electric vehicles (EVs) in rural areas. With EV sales growth slowing down in the world’s largest automobile market, the Ministry of Commerce is coordinating this initiative, which will encourage financial institutions to provide credit support for car purchases.
The campaign will also involve subsidies and discounts offered by local governments and automakers, particularly for EVs, according to a government statement. The primary objective is to drive EV adoption in over 11,000 counties and villages across China by improving charging infrastructure and implementing support measures such as consumer subsidies.
Chinese officials have consistently emphasized the importance of EV adoption and stimulating overall car sales. The State Council recently announced an extension of tax breaks for new-energy vehicle purchases, while in May, the country’s economic planning agency and energy bureau called for the expansion of charging infrastructure beyond major cities.
Despite China being the largest market for green cars, experiencing a 95% increase in the segment last year, sales growth has slowed. From January to May, EV and plug-in hybrid sales increased by 41%, a significantly slower pace than the 120% growth witnessed during the same period in 2022. In comparison, the overall automobile market saw a modest 4.2% increase in the first five months of this year, as reported by the China Passenger Car Association.
Yale Zhang, the managing director of Shanghai-based consultancy Automotive Foresight, described the campaign as a massive advertising effort for the automotive industry. However, subsidies for car purchases may vary across regions, and it remains uncertain how much financial support will be provided, given the financial constraints faced by many local governments grappling with high levels of debt.
Some automakers are responding to the call to promote EVs in rural areas. General Motors Co.’s joint venture with SAIC Motor Corp. and Wuling Motors Holdings Ltd. has offered a 13,000 yuan discount on its popular Hongguang Mini EV range until the end of June.
State-owned Chery Automobile Co. is providing a 1,000 yuan discount and free lifetime servicing for certain EV models. Shares in car manufacturers saw a slight increase, with SAIC’s stock rising by 1.4% and China’s largest EV maker, BYD Co., seeing a 1% increase in Hong Kong. Geely Automobile Holdings Ltd. also experienced a 1.4% climb.
