The Impact of the Phase-Out of National Purchase Subsidies on China's New Energy Vehicle Industry: A Difference-in-Differences Research Design

Abstract

China has implemented a series of policies to boost the new energy vehicle (NEV) sector, such as purchase subsidies, technical standards, charging infrastructure, industrial planning, and tax incentives. In 2022 the national purchase subsidy programme was phased out, but policy supports continue, which suggests a shift in policy support rather than its withdrawal. Based on the results of this study, the authors propose a Difference‑in‑Differences (DiD) research design to examine the effects of subsidy withdrawal on market performance and technological innovation across Chinese provinces with varying levels of subsidy exposure. Market performance will be measured using NEV registrations and market share, and innovation will be evaluated by the number of new models introduced and the number of invention patent applications. The study analyzes whether government support fostered sustainable industrial capacity or market dependency. NEV is not the same as all industries, but is seen as a good example of an industry that is a policy intensive strategic emerging industry and will offer insights into the longer-term impacts of industrial policy.