China’s minister of industry and information technology has said that the country’s automotive industry expects to double new energy vehicles sales to reach 2 million by 2020, reports Caixin.
Last year’s sales saw a rapid growth of 83% year-on year to reach 1.01 million units, according to the China Passenger Car Association (CPCA).
The Center for Strategic and International Studies reports, however, that this increase has been more the result of government support than consumer demand. Beijing spent a total of RMB 393 billion ($56.6 billion) between 2009 and 2017 in efforts to promote the development of the industry. Support included sales subsidies, government procurement, sales tax exemptions and research initiatives.
However, Beijing began cutting back on its subsidies early last year as part of its plan to put an end to all subsidies after 2020. In its place, the government has introduced a “dual-credit” system which forces automakers to produce a certain number of new-energy vehicles per year.
Automakers have voiced concerns that the new policy will mainly drive the production side of the industry but not necessarily the demand for new-energy vehicles.