China is extending its subsidies for new green or environment friendly cars until 2020 instead of supposedly ending it this 2015, based on draft rules released on Tuesday.

This policy shows China's latest attempt to fight chronic pollution and messy traffic jams. It is also a blessing for companies like Warren Buffet-backed BYD Co Ltd, which is China's biggest company known for their electric vehicles.

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The Ministry of Finance announced the draft rules on their website, saying customers who will buy pure electric, highly electrified plug-in hybrid and fuel-cell cars are the ones who will benefit from the subsidies. They will be given the amount of subsidies gradually scaled down starting from 2016 up to 2020.

With the hopes of the car industry to help the country's fight against pollution and lessen their dependence on imported oil, China has released a number of policies to push the sales of green vehicles.

The great news is that green vehicles have increased their production five times more than the first 11 months of 2014 compared with that in 2013. However, the industry is still lagging on their goal to produce five million new green vehicles to hit the road by 2020.

The country will only shoulder the subsidies of locally produced green cars. This means the imported ones made by BWM, Tesla Motors Inc. and Nissan Motor Co Ltd are not included in the subsidies.

Buyers of pure-electric cars will receive up to US$8,834 (CNY55,000), according to the draft rules. On the other hand, purchasers of pure-electric buses will be able t receive up to US$3.1 million (CNY500,000) as subsidy.

Tagsgreen vehicle, green car subsidy, Electric Car