Tougher rules for electric vehicle subsidies

China will impose stricter standards for new-energy vehicle manufacturers and cut the subsidies for pure electric cars in a move aimed at weeding out companies that lack the ability to provide quality products.

The government has raised the technology threshold for makers of new-energy vehicles - comprising electric vehicles, plug-in hybrids and fuel-cell cars - by setting standards on energy consumption and driving distance on a single charge, according to a statement posted by the Ministry of Finance on its website. Subsidies on pure electric as well as hybrid plug-in passenger cars will decline by 20 percent from Jan 1, and a cap has been placed on the subsidies at local-government levels, the ministry said.

The steps will likely lead to a shakeout in China's electric-vehicle industry with 200-plus companies, as many may not be able to meet the more stringent guidelines. Generous subsidies helped cultivate a gold-rush mentality, prompting concerns the industry is plagued by too many manufacturers lacking the technical know-how to produce electric or hybrid cars that measure up to those from Tesla Motors Inc or General Motors Co.