Photo shows the Audi Q7 e-tron plug-in hybrid vehicle at the Beijing International Automotive Exhibition on April 27, 2016. [Photo: Xinhua]

Chinese authorities have announced that subsidies for new-energy vehicles are to be gradually reduced and then cancelled by 2020, reported China National Radio.

The subsidies will in general drop by 20 percent in 2017 year-on-year. The maximum subsidy will drop to 66,000 yuan, or 9600 US dollars, down from 110,000 yuan last year.

The Chinese government had offered high subsidies for new energy autos, especially purely electric powered cars, to encourage more drivers to purchase the environmentally-friendly vehicles.

With favourable policies, sales of new energy cars in China have been higher than anywhere else in the world for two consecutive years. Last year, 507,000 new energy autos were sold in China.

Statistics from the China Association of Automobile Manufacturers show that 15 Chinese new energy automakers are expected to receive 30 percent net profit growth in 2016.

China Merchants Securities Analyst Peng Qi said high subsidies spurred sales of new energy vehicles. The decreasing subsidy will urge automakers to improve competitiveness through advanced technology and lower costs so that customers will have more choice for high-quality new energy vehicles.

Chen Xiufeng, chairman of battery-maker Shenzhen Senior Technology Material Co., LTD, said since electric vehicles account for only 1.4 percent of the automobile market, the prospects for new energy vehicles remain optimistic.

Last year, the number of public charging piles surged from 50,000 to 150,000, as batteries became safer and more powerful.

Dong Yang with the China Association of Automobile Manufacturers said though the subsidies will be cancelled gradually, the government will offer other favourable policies such as discounts in road tolls and taxes.