(Yicai) March 20 -- China has introduced a series of subsidies to accelerate the replacement of old urban buses with new electric ones to promote the electrification of the public transportation network.

Chinese bus operators can receive an average subsidy of CNY80,000 (USD11,000) for each electric bus they purchase to replace an over eight-year-old one, according to a new policy issued by the Ministry of Transport, National Development and Reform Commission, and Ministry of Finance yesterday.

The new e-buses bought to replace the old ones need to be included in relevant tax-exemption catalogs. They can be pure electric, plug-in hybrid, and hydrogen fuel cell buses.

Moreover, bus operators can get CNY42,000 in subsidies to replace their electric buses’ power batteries that passed their warranty periods or fail safety operation standards before the end of the year.

The policy aligns with the State Council’s push for large-scale equipment upgrades and trade-in programs, as it uses fiscal subsidies to accelerate the retirement of outdated buses and promote new energy vehicle deployment, industry insiders told Yicai. The subsidies, funded by ultra-long special treasury bonds, are fatter than in 2024.

The central and local governments will allocate the subsidies based on a 90:10 ratio, with the figure expected to vary based on the region. Eastern provinces will have an 85:15 ratio, central provinces a 90:10 ratio, and western provinces a 95:5 ratio.

China’s power battery sales soared over 28 percent to 791.3 gigawatt-hours last year from the year before, according to data from the China Automotive Power Battery Industry Innovation Alliance. With the country’s production capacity exceeding 1,800 GWh, the policy aims to absorb excess capacity and optimize resource allocation.

During the Two Sessions, several National People’s Congress deputies and Chinese People’s Political Consultative Conference members proposed establishing an early-warning mechanism for new energy bus batteries, supporting infrastructure planning, stipulating standards and regulations, and enhancing recycling systems to create a green industrial chain.

Moving forward, China needs to further promote power battery technology upgrades, such as improving range, reducing charging times, and expanding infrastructure, to address concerns for electric buses, Chinese public transport operators told Yicai.

Editor: Futura Costaglione