The Ministry of Finance revealed that residents of five cities – Shanghai, Shenzhen, Hangzhou, Hefei and Changchun – will be entitled to subsidies of up to 60,000 yuan ($10,500) when they buy fully electric vehicles.
Plug-in hybrids will also attract a 50,000 yuan ($8700) subsidy as the government increases its efforts to reduce the environmental impact from the world’s largest automotive market.
Nation-wide subsidies of 3000 yuan ($525) will be available to consumers who purchase new cars with engines 1.6-litres or smaller and are at least 20 percent more fuel efficient than current Chinese standards.
Some analysts are predicting the take-up of the EV/plug-in scheme will be slow as China’s electric vehicle infrastructure and charging network is underdeveloped and still very much in the early stages.
But the Ministry confirmed the funding program will include the expansion of battery exchange and charging stations in the pilot cities.
A number of Chinese manufacturers have already made pioneering steps, with Geely Automotive offering the plug-in hybrid F3DM since March and SAIC Motor Corp set to launch its own hybrid later this year.
Although slightly sketchy on some of the finer details, the government said the money will be allocated to the carmakers rather than directly to the consumers, and said the funding would decrease after a manufacturer sold 50,000 low-emissions vehicles.
The government is yet to announce when the program will come into effect.