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What Does The Chinese EV Subsidy Extension Mean For EV Stocks?

Ollie Martin - AskTraders News writer
Ollie Martin trader
Updated 18 May 2022

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Key points:

  • The Chinese government is in talks with automakers to extend EV subsidies past 2022
  • The move comes at a time when the Chinese economy is slowing with Covid-19 lockdowns
  • Tesla, Xpeng, Nio and Li Auto are US listed Chinese stocks that investors will want to pay attention to

The Chinese EV market is leaps and bounds ahead of the global curve. Shortcuts in technological innovation and a wider cultural shift have helped, but government subsidies have played a crucial role in the explosion of the Chinese NEV space, something that the rest of the world hasn’t quite woken up to yet. Up until recently, subsidies for EV’s were set to expire in 2022, but today’s news surrounds rumors that China is in talks with automakers to extend the costly subsidies. 

For Chinese EV stocks, this can only mean good things. US listed companies like Nio, XPeng and Li Auto will remain a forward focus for EV investors, making the most of the government incentives whilst the US and European market trails behind. It’s at a time when – due to recent Covid lockdowns – the economy has slowed. The subsidies hope to spur further growth in one of the strongest arms of Chinese industry. 

Read Also: Best EV Stocks To Buy Right Now

Current talks involving the Ministry of Information and Industrial Technology could see subsidies extended into 2023, but further details of the agreement are still under wraps from the public. 

There’s no doubt the subsidies have helped solidify the world's largest EV market. Since the rollout, around $14.8B has been handed out in subsidies, made available for all automakers – including EV giant Tesla. 

US investors should pay close attention to Tesla, Xpeng, Nio and Li Auto over the coming year as consumers cling on to another year of subsidies. Continued growth of the Chinese EV market will likely have a resounding effect on global vehicle purchase patterns, but the US market is still playing catch up. 

Ollie Martin - AskTraders News writer
Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.