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In order to promote the development of the automobile industry, China formally implemented the New Policy of 2019 New Energy subsidies in June this year. After the implementation of the New Policy, the local subsidies for new energy vehicles basically ended, while the state subsidies for the new energy industry also shrunk to less than half of the original. Now, a month later, some car companies have to increase prices and reduce the allocation of some models due to the operating pressure brought about by subsidies.

The price increase is due to helplessness.

It is understood that 4S stores such as BYD, BAIC New Energy and Jianghuai New Energy have recently said that the prices of their new energy models on sale will rise in the near future. With regard to the price increase of new energy vehicles, Chen Shihua, assistant secretary general of the China Association of Automobile Manufacturers, said, "at present, the profit margin of new energy vehicles is very low, and it is very difficult for car companies to bear the reduction of subsidies." After the drop in subsidies, the costs of car companies have increased significantly, and it will be very difficult to maintain normal profits without price increases.

For new energy vehicles, the decline of subsidies is much greater than the decline in the cost of car companies, which makes the profit pressure of new energy vehicle companies become greater. Car companies should not only cover manufacturing costs, but also consider the cost of capital that has not been subsidized in place. So it is bound to raise prices, which is also a helpless move.

Price insurance forces car companies to reduce their allocation.

In the case of a substantial reduction in subsidies, some car companies have announced price insurance, such as Changan, Weima, Xiaopeng and other car companies said that "despite the subsidy slope, do not return slope sincerity." If there is no price increase, it means that car companies will pay out of their own pocket to make up for the price difference caused by reduced subsidies, and under the cost pressure brought about by price insurance, car companies are bound to find ways to reduce the cost of new energy vehicles, among which some car companies have reduced the distribution of their new energy vehicles.

In this regard, people said that in the environment of substantial reduction in new energy subsidies, Changan, Weimar and other car companies choose price protection, not do not want to rise, but do not dare to rise. For car companies, if they choose to raise prices at this time, it is tantamount to pushing customers to competitors who do not raise prices. Therefore, car companies with financial resources choose not to raise prices, hoping to maintain market share. However, in order to keep the original price to compete for the market while minimizing losses, some car companies will inevitably reduce the configuration of new cars in order to reduce the cost of new cars.

Since the implementation of the new policy, the subsidy for pure electric passenger vehicles with mileage from 250km to 400km has declined by 60%, that for pure electric passenger vehicles with range greater than or equal to 400km by 50%, and for plug-in hybrid models with range greater than or equal to 50km, has been reduced from 22000 yuan in 2018 to 10, 000 yuan. In the face of the reduction of subsidies for new energy vehicles by more than half, the profit pressure of car companies has greatly increased, and there is nothing wrong with raising prices and reducing the allocation of some models; in such an environment, the competition among new energy vehicle companies will become more and more fierce in the second half of this year.

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