KAPSARC – China’s Vehicle Trade-In Subsidy

The main theme is the evaluation of the effectiveness of vehicle trade-in subsidies in China, their impact on the market, and barriers to electric vehicle purchase.

Key findings include the introduction of subsidies in 2024 to stimulate vehicle demand and fleet renewal. About 44% of vehicle trade-ins were directly linked to the subsidy, with a significant impact on low-income consumers. The subsidy accelerated vehicle replacement by an average of 1.2 years, especially among low-income groups. More than half of the respondents chose internal combustion engine vehicles, indicating existing barriers to electric vehicle adoption, such as high upfront costs, limited charging infrastructure, and range anxiety.