China is proposing to reduce subsidies for electric buses because the policy was considered overly generous, while imposing a price ceiling on passenger vehicles that qualify for incentives, according to knowledgeable sources.

 

Incentives for electric buses will be cut by an average of 32 percent, with subsidies for the largest models slashed as much as 49.5 percent, sources said.

 

Under the proposal, electric passenger vehicles costing more than 350,000 yuan ($53,800) won't be eligible for government subsidies.

 

The plan is still being reviewed by various ministries and has to be approved by the State Council, or cabinet, the people said.

 

The plan, if approved in its current form, may dampen electric vehicle sales, which surged more than threefold last year to 331,000.

 

China has encouraged consumers to switch from conventional automobiles to EVs and plug-in hybrids to reduce air pollution and to push carmakers to adopt what it sees as the dominant automotive technology of the future.

 

The Ministry of Industry and Information Technology did not immediately respond to a request for comment.

 

BYD Co., which produces electric buses, electric cars and conventional gasoline-powered vehicles, said Tuesday that it expects to triple EV sales this year with "comprehensive policy support" from the government.

 

Company Chairman Wang Chuanfu said the rapid sales growth will extend into 2018.