On September 17th, the Chinese Ministry of Finance announced the long anticipated renewal of China’s New Energy Vehicle (i.e., electric vehicle or EV) subsidies. The new subsidies for cars were in-line with market expectations, but will be reduced to 10% below the current levels next year, and 20% below the current levels in 2015. Subsidies for buses fell short of expectations.
Conventional gasoline-electric hybrid models were not included in the subsidies, but some plug-in hybrid (PHEV) were. The subsidies amount to 60,000 yuan ($9,802) for pure electric autos with a range over 250 km (155 miles), and 50,000 yuan ($8,168) and 35,000 yuan ($5,718) for EVs with range over 150 km (93 mi) and 80 km (50 mi), respectively. A restriction on the subsidy for low-speed electric vehicles was removed.
Electric and Plug-in hybrid electric buses also received subsidies, depending on length. For buses over 50 m in length, EVs will receive 500,000 yuan ($81,680), and PHEVs will receive 250,000 yuan ($40,840). Shorter PHEV buses do not receive a subsidy, but EV buses over 8 m and 6 m will receive 400,000 and 300,000 yuan, respectively.
Stock Winners
The big winners here seem to be manufacturers of Chinese low-speed electric vehicles, among which are Kandi Technologies (KNDI) (Note:I was long this stock when this article was written; I have since sold my position.) and its joint-venture partner Geely Automotive (OTC:GELYY.PK). Several other Chinese manufacturers of low speed electric vehicles such as Chery Automotive, Shandong Shifeng Group and Hebei Yu Jie Ma may benefit as well. The day after this article was first published, Kandi issued a press release detailing the benefits of the new subsidy policy on its operations and received significant coverage in the US press. The stock soared as high as $7 over the next two
