"Chinese Electric Vehicles Received 321 Trillion Won in Subsidies Over 15 Years"

US CSIS Study... "Quality Improvement with Large-Scale Support"

Bloomberg reported on the 20th (local time) that China's electric vehicle industry has received government subsidies and support totaling 321 trillion won from 2009 to last year.

Scott Kennedy, a China expert and researcher at the Center for Strategic and International Studies (CSIS) in the United States, stated that this estimate was derived from the investigation results. Of the total subsidies amounting to $231 billion (approximately 320.9745 trillion won), more than half were provided in the form of a sales tax exemption (10%).

[Image source=AP Yonhap News]

The scale of the sales tax exemption reached about $40 billion last year, reflecting the rapid surge in electric vehicle sales in China. In 2020, it was less than $10 billion.

Additionally, subsidies were provided through government funding for buyer rebates, infrastructure such as charging stations, government procurement of electric vehicles, and research and development (R&D) support.

Previously, the United States announced a 100% tariff on Chinese electric vehicles, and the European Union (EU) raised tariffs up to 48%. On the same day, Bloomberg reported that Canada has also begun public consultations to introduce tariffs on Chinese electric vehicles.

Researcher Kennedy said, "China's electric vehicle industry has received large-scale industrial policy support, resulting in improved quality and popularity among consumers," adding, "Other countries such as the United States and Europe need to consider both facts effectively to respond."

He also noted that the estimate of $231 billion in Chinese government subsidies is very conservative, as it does not include local government rebates encouraging internal combustion engine vehicle owners in Shanghai and Shenzhen to switch to electric vehicles. Furthermore, cheap land leases, power support, loans, and supply chain support such as batteries and parts were also excluded from the calculation.

The subsidy per vehicle fell from $13,860 in 2018 to below $4,600 in 2023. In the United States, the Inflation Reduction Act (IRA) provides up to $7,500 to electric vehicle buyers.

Researcher Kennedy pointed out, "If the quality of Chinese electric vehicles had been poor, they would not have posed a serious threat to automakers in other countries," and criticized, "Western automakers and governments acted foolishly and did not take aggressive action."