China could reduce, or even eliminate, subsidies to carmakers
- The 4th Plenum of the 20th Central Committee of the Communist Party of China adopted the proposals of the Central Committee of the Communist Party of China on the preparation of the 15th Five Years Plan for Economic and Social Development (2026-2030 plan). However, this plan, unlike its predecessor (14th Five Year Plan – 2025-2030), no longer mentions new energy vehicles (NEVs, including battery electric vehicles).
- Economists specializing in China have deduced that one consequence could be the gradual reduction, or even the elimination, of the massive subsidies that have supported this sector. This position of the Chinese government stems from the maturity reached by Chinese carmakers and the Chinese automotive market. BEVs, PHEVs and F-HEVs represent almost half of all sales in 2025. carmakers like BYD, Geely and Chery dominate the Chinese market and are making progress throughout Europe and Southeast Asia.
- The Chinese government's policies have fostered the creation of world-class carmakers and a comprehensive ecosystem encompassing batteries, components, and assembly. However, behind this undeniable success lies a weakness. More than 150 carmakers are currently operating in China, the majority of which hold only a tiny market share. Subsidies have encouraged an oversupply relative to actual demand, leading to fierce price wars among carmakers. Eliminating subsidies could lead to the demise of the weakest carmakers and encourage a process of natural selection within the Chinese automotive industry, where only the most powerful and profitable players survive.