By Zhang Yongwei, Research Team on “Invigorating Vitality of Innovation Entities”, Enterprise Research Institute, DRC

Research Report No.186, 2016 (Total 5069) 2016-12-21

Abstract: Local governments’ drive in actively developing electric vehicle industry has evolved into local protectionism and led to market segmentation, which have become major obstacles constraining the sustainable development of electric vehicle industry. There are many forms of local protectionism. Some local governments require non-local enterprises to set factories locally otherwise their cars will not get permission for sale in local market; some local governments set local standards for market access to protect local enterprises, provide subsidies only to local enterprises while restricting non-local enterprises from applying for subsidies; some local governments adopt different treatment approach toward local and non-local enterprises in selling cars or conferring car licenses. Against such a background, the government needs to intensify brand building of electric vehicles and establish a unified national market for the sale of electric vehicles so as to remove local protectionism. Local governments need to take measures to gradually cancel local subsidies and issue new energy vehicle integral management system to alleviate the impact on electric vehicles after the reduction of subsidies. Work should be done to strengthen the authority of national standards and the transparency in the process of their formulation. The tax system of car industry should be reformed and the taxes on car owners and users can be gradually increased whereas the taxes related to manufacturing and purchasing should be reduced to discourage the initiatives of local government to have their eye only on production.

Key words: electric vehicles, local protectionism, subsidy