Back to News
China has renewed its car trade-in subsidy scheme for 2025 after previous policy officially expired at the end of 2024. The scheme is the last remaining incentive the central Chinese government offers for EV adoption, as the country’s EV subsidy ended in 2022. The trade-in scheme has been highly successful at stimulating further demand in consumer demand for EVs.
Details of the 2025 policy
Under the trade-in scheme, consumers can receive a subsidy of up to RMB20,000 (USD 2,730) when they scrap an older ICE vehicle or EV and purchase a new EV. Alternatively, they can qualify for a subsidy of up to RMB15,000 (USD2,047) when scrapping a vehicle and buying a new ICE vehicle with an engine smaller than 2.0 litres.
Eligibility criteria for scrapping vehicles have been updated from 2024. For ICE vehicles, the subsidy now applies to those registered before June 2012 with a China 4 emission standard or lower, expanding from the previous year’s requirement of China 3 emission standard or lower. Similarly, eligible EVs for scrapping must have been registered before December 2018, compared to April 2018 under the prior policy.
The scheme also allows consumers to sell vehicles on the second-hand market instead of scrapping them. In this case, the subsidy amounts are slightly reduced, offering up to RMB15,000 (USD2,047) towards a new EV and RMB13,000 (USD1,773) towards a new ICE vehicle.
Key read: Tesla set to create super pool as EU 2025 emission standards come into force
A positive performance in 2024
Initially introduced at the end of April 2024, the scheme has proved very popular with Chinese consumers attracting over four million applicants in its first six months, over two million of which traded in their vehicles.
The trade-in scheme is part of a broader government initiative that includes subsidies for consumer electronics. For the 2025 iteration, the central government has allocated RMB 81 billion (USD 11 billion) to the overall program. However, the specific portion dedicated to vehicle trade-ins remains unclear.
Renewal of the trade in scheme in the context of a maturing EV market
China’s EV market grew 40% over 2024, with its monthly EV sales penetration rate surpassing 50% three times last year. While many consumers are opting to buy EVs due to price and convenience, the trade-in subsidy schemes remain key to taking older ICE vehicles off the road and continuing to incentivise consumers.
Looking to the future, China’s MIIT has released draft legislation for the “Requirements for the Management of Passenger Car Enterprise Average Fuel Consumption and New Energy Vehicle Credits in 2026-2027”. In the draft legislation it indicates the government will mandate that from 2026, “new energy vehicle” sales must increase to 48% overall in 2026, and 58% by 2027, further pushing EV adoption.
More Information
For more information about the EV market see our research or get in touch.
Image credit: Adobe Stock
For full access to our news and insights, log in to our Membership Platform
If you’re not yet a member and would like a trial, fill in the form below.