China, a key player in the EV sector due to its dominance in rare earth metals, is grappling with excess car inventory. In a recent move, various cities in China have halted subsidies for car buyers. This action may negatively affect new car sales in China. Some local governments have cited the exhaustion of central government funds as the reason for the subsidy suspension. Others have stated that they are optimizing capital use. The government had used subsidies on cars and other items to stimulate consumer spending during a period of economic slowdown, including a slump in the property market and concerns about jobs and wages. Retail data reveals that these subsidies contributed to a growth of 6.4%. While the subsidies are currently paused, the National Development and Reform Commission has confirmed that the government will continue to provide support through 2025. The automotive industry is currently seeing challenges due to a price war and the selling of brand-new cars at discounted prices. This has prompted the revision of subsidy policies.
