China’s Economic Stimulus to Include Electric Car Industries
In the wake of the COVID-19 pandemic, every industry across the globe seems to be receiving the most significant blows and recession of its life, and in China, Industries have suffered the most. With the coronavirus disease almost being contained in china, the Beijing administration is already drafting and implementing economic stimulus packages to revive the economy. An essential consideration in this stimulus is the New Energy Vehicle industry, which has always been a long term priority to the government. During the pandemic, consumer discretionary purchases such as buying a new car were absurd, as the most important things were the basic needs such as food, water, and medicine. This purchase withdrawal meant that the automobile industry would experience an even stricter time to cope with the market turbulence.
The automotive sector is a significant player in china’s economy as it accounts for more than one-sixth of total jobs and 10% of the country’s sales. To help the industry, the Chinese government has extended the expiry period of subsidies and tax cuts to electric manufacture and buyers by two years. With this, the government aims at enticing and encouraging more people to opt for electric vehicles. Battery charging infrastructure has always been a significant issue that has discouraged people from buying electric cars. The government released 2.7 billion Yuan to advance and develop more charging stations and infrastructure to encourage more people to buy electric vehicles as the resources will now be available.
According to a report by the Ministry of Industry and Information Technology, the production of electric vehicles declined by 60.2% while sales fell by 56.4% in the first quarter of 2020. This translates to the loss of jobs and revenue amounting to billion Yuan. About this, the Chinese government has committed its post-coronavirus stimulus to increase the share of electric vehicles in the market to a quarter in the next five years. This means that china expects to have sold a total unit of 7 million electric cars by 2025. In support of the government’s efforts, startup electric vehicle industries have resumed production back online and launching of new products. WM Motors, in particular, has been witnessing daily improvements in terms of sales and is planning to increase the number of its stores from 120 to 190.
Electric vehicle industries in China, such as Tesla and others, are also liaising with other major corporations to improve the quality of the new energy vehicles as well as infrastructure and ecosystems. The industry is also set to benefit from fleet purchases from the government and commercial businesses.