The decision taken by the Chinese Ministry of Finance raises difficulties on the conditions for electric vehicle investments to benefit from state support and it has also been announced that the deserved payments to be made to the companies will be cut.
In 2016, a five-year support program was announced in order to increase sales and improve technology in the electric vehicle sector. However, the amount of support that has been reduced since then, will be completely disabled by the end of 2020. Meanwhile, because some firms in the sector are dependent on the support fund this policy change led to criticism.
Following the announcement of the decision, some of the major players in the electric vehicle industry in China such as BYD, BAIC Blue Park and Contemporary Amperex Technology, the battery manufacturer, saw a decline of between 1% and 2.5% in Shanghai and Shenzhen stock exchanges.
Although last year auto sales in China have declined for the first time since 1990, the electric vehicle market was able to maintain its growth trend.
