To be eligible for subsidies, NEV's (BEV and HEV's) must now have a driving range of at least 250km, compared with 150km in 2018. National subsidies have declined by more than 50%, whereas local subsidies will be eliminated completely after a three-month transition period.
As China is the dominating market for EVs, this policy will have a major impact on the whole industry. In the short-term it will definitely lead to less demand for electric vehicles. This will have a negative impact on the whole value chain. In addition, it will lead to consolidation, because only battery producers can survive, which have state-of-the-art technologies. Therefore battery producers must invest in research and development, including optimising battery manufacturing processes. In the long-term this will raise the competitiveness of Chinese battery producers.