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Behind the sharp decline of NEV production in January

China’s NEV production reached 16,100 units in January 2016, a sharp decline of 84 percent from December 2015, according to statistics released by the Ministry of Industry and Information Technology (MIIT) on February 16. In December, the production was 99,800 units.

The production decrease is caused by three main factors, reported eeo.com.cn, citing an executive of a component supplier.

“First, some local governments have not yet announced detailed subsidy policies, causing automakers’ hesitation about producing NEVs,” said the executive. “Second, the central government’s investigation on subsidy fraud in the NEV industry starting from 2015 caused deterrence in some companies. Third, roadmap of power battery technologies changed significantly, for example, buses powered by ternary lithium batteries cannot be listed in the NEV promotion catalogue released by MIIT.”

China announced in December 2015 to cut ¥5,000 ($793.7) in subsidies for each battery electric and plug-in hybrid passenger vehicles in 2016, leading to explosive growth of production at the end of 2015.

“A large amount of electric buses, leasing vehicles and taxies were registered in some cities at the end of 2015,” an executive at a NEV sales company told the local media.

Production of battery electric and plug-in hybrid commercial vehicles reached 2,422 and 834 units in January respectively, down 96 and 85 percent from December 2015, according to the latest data released by MIIT based on factory certificates. The significant decrease of the commercial vehicle production may be mainly caused by the government’s investigation on subsidy fraud.

MIIT announced last year that buses powered by ternary lithium batteries will not be listed in the catalogues of models eligible for government subsidies, impacting the output of battery electric buses significantly.

In addition, the number of the models in the catalogue is also decreased. Only 247 NEV models, including 53 passenger vehicles, are listed in MIIT’s first catalogue released on January 14. The previous 76 catalogues covering 3,409 energy-saving and new energy vehicle models released in 2009-2015 were abolished on January 1.

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