Excluding Shenzhen, local governments from China's first-tier cities like Beijing, Shanghai, and Guangzhou (Guangdong province) recently made announcements to reduce subsidies for domestic electric vehicle (EV) makers.

In Beijing, subsidies for EVs will no longer surpass 60 percent of the sale price, and the ratio of subsidies issued between central and local governments should be kept within one to 0.5.

Government authorities in Shanghai and Guangzhou carried out similar policies in concerted efforts to push local automakers to increase their competitiveness.

Last year, about 70 percent of the best-selling EVs in China were purchased solely to receive a license plate. In some cities in China, car purchasers have to apply for plates through lottery systems for EVs and gas-fueled cars. To promote the use of new energy cars and tighten the ownership of gas-fueled cars, it is much easier to get the license plates for EVs.

According to CNR, governmental subsidies tend to concentrate more on cutting-edge technologies, such as the mileage per charge, battery energy density, and the vehicle's energy consumption per unit.

Early EV batteries were able to travel between 150 to 200 kilometers per charge. However, this year, particularly after June, most EVs in the market can travel above 300 kilometers on a single charge.

With the subsidies expected to trickle down to more advanced technologies, high-performing manufacturers may still have opportunities to receive more financial support than before, despite the tightened control over the distribution of government funds, said Yang Zhao, director of the public relation office of BYD, one of China's major automobile manufacturers.

According to the Ministry of Industry and Information Technology, China has secured the top position in the global EV market by sales for three consecutive years.

However, according to Cui Dongshu, secretary-general of China Passenger Car Association, even though China's EVs are competitive in price, they lack the necessary components that can offer improved functions.

Despite the drawbacks of domestic manufacturers, China insists on opening its populous market to overseas EV manufacturers, including the world's top EV producer -- Tesla. The US automaker recently launched a manufacturing base in Shanghai and a research and development center in Beijing.

"China and the United States are the two major markets in the world for Tesla to sell its cars," said Du Fangci, a consultant from the China Association of Automobile Manufacturers.

"However, because the US market is showing signs of a mediocre performance, the automaker is trying to bet on its business in the Chinese market due to its substantial consumption capacities with a growing number of high-end consumers," Du added.

According to Yang, the fiercer the competition between domestic manufacturers and foreign investors, the better the EV market in China will be. 

China has a complete EV industrial chain which is essential for foreign manufacturers to expand their popularity among Chinese consumers, he explained.

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