BEIJING — China will subsidies by a fifth next year on new energy vehicles such as electric cars, the finance ministry said on Thursday, as it seeks to combat pollution and cultivate home-grown champions in the auto sector.

China, the world’s biggest auto market, has set a target for NEVs, including plug-in hybrids and hydrogen fuel cell vehicles, to make up 20 percent of auto sales by 2025, up from 5 percent now.

China’s EV market dwarfs that of other countries and the government is intent on further expansion amid commitments to reduce fossil-fuel use.

Global automakers such as Volkswagen Group, General Motors, Toyota Motor Corp. and Tesla Inc. are ramping up EV production in China. The are facing competition from domestic automakers, notably Nio, Xpeng and Li Auto.

Subsidies will be reduced by 10 percent on NEVs for public transport, including buses and taxis, the ministry added in a statement on its website.

China will also beef up regulations on new auto investment and manufacturing, the ministry said, in a move to prevent overcapacity in the auto sector.

It will take steps to spur further consolidation in the auto industry and build a more comprehensive supply chain, the ministry added.

China will extend subsidies and tax exemptions on NEV purchases to 2022. It expects to sell 1.8 million NEVs next year, up from about 1.3 million this year.

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