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The 2018 subsidy implements different policies in three phases, and how new energy car companies respond
The challenges faced by traditional car manufacturers have become increasingly complex. Older models are hard to price, while new models struggle to gain traction in the market. These difficulties can be traced back to the 2018 subsidy policy adjustments. According to information obtained from the Ministry of Industry and Information Technology, a three-phase subsidy system was introduced for new energy vehicles in 2018, based on their licensing dates:
From January 1 to February 11, 2018, new energy vehicles were eligible for the 2017 subsidy rate (Caijian (2016) No. 958). From February 12 to June 11, the subsidy for new energy passenger cars dropped to 70% of the 2017 level, while trucks and special vehicles received only 40%. Starting June 12, the 2018 subsidy standard (2018-18) took effect.
This means that in 2018, different models would face varying levels of support, directly impacting profit margins and final sales prices. The transition period from February to June became critical for many automakers, especially for A00-class models—those with ranges under 250 km. During this time, these models still qualified for higher subsidies, creating a "golden window" before the full implementation of the 2018 policy.
Models like BAIC EC series, Zhidou D2, Chery eQ, JAC IEV, and Changan Benben EV saw high demand in 2017, with A00-class vehicles accounting for over 54% of total new energy passenger car sales. However, after June 12, these models would face either zero or significantly reduced subsidies, forcing manufacturers to clear inventory or prepare for upgrades.
Many companies opted to sell existing stock at 2017 prices, while pre-selling upgraded versions with longer ranges. For example, Changan Benben EV260 had a pre-sale price of RMB 69,800, which later increased to between RMB 72,800 and 48,800. Similarly, Chery’s eQ1 saw multiple price adjustments during the pre-sale phase.
Manufacturers also faced pressure due to rising production costs and the need to meet new technical standards. While suppliers could lower component prices, overall profit margins were expected to shrink. Some brands, like Jianghuai, chose to focus on product upgrades rather than waiting for the market to stabilize. Their iEVA50 model, with a range of up to 400 km, was scheduled for release in March, signaling a shift toward higher-range vehicles.
Industry experts predict that future trends will favor long-range, SUV-style, and larger vehicles. This shift is driven not only by policy but also by consumer demand. A00 models, often used in shared mobility services, are expected to maintain a stable market presence. Meanwhile, SUVs are gaining popularity in the new energy segment, with Chery planning to launch its 3xe model in March.
In summary, the 2018 subsidy changes forced automakers to adapt quickly. While some focused on clearing old inventory, others began preparing for the next generation of products. Despite the challenges, there was a consensus on the direction of future development: higher performance, more spacious designs, and a stronger focus on SUVs.