In 2024, China introduced a vehicle trade-in subsidy to stimulate automotive demand and promote renewal of the national vehicle fleet. This study presents the first evaluation of the subsidy’s effectiveness in encouraging additional vehicle trade-ins, accelerating fleet turnover, and shaping consumer preferences between internal combustion engine vehicles (ICEVs) and plug-in electric vehicles (PEVs). Using survey data from program participants, we assess the subsidy’s additionality – the proportion
of trade-ins that would not have occurred in its absence – and analyze its cost-effectiveness. Results indicate that approximately 44% of respondent trade-ins were directly attributable to the subsidy, with a greater impact observed among lower-income consumers. On average, the subsidy advanced vehicle replacement by 1.2 years, with stronger effects in lower-income groups. More than half of the surveyed recipients chose ICEVs, underscoring persistent barriers to PEV adoption, including high upfront costs, limited charging infrastructure, and range anxiety.
