Solar panel prices tumbled around 30 percent last year after China, the world’s largest producer, cut subsidies to shrink its bloated solar industry, pushing smaller manufacturers to the brink of collapse.
1. Cutting subsidies should raise prices. I guess the subsidy cut could have offset a steeper decline, but the article is full of head-scratchers like this one.
Depending on the structure of the subsidy, it’s possible for a cut to lower prices. For example, EV buyers get a tax credit for their purchase. A big chunk of that surplus is captured by the seller. Without the tax credit, the natural price would drop. Compare the price of a new Fiat 500 EV to a used one. The latter is practically free, and it’s not the natural depreciation of a used car.
1. Cutting subsidies should raise prices. I guess the subsidy cut could have offset a steeper decline, but the article is full of head-scratchers like this one.
2. When has China ever cut a major subsidy?