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Designing and implementing effective new energy vehicle (NEV) policy are policy priorities for policymakers and energy policy scholars. However, the formulation, adoption, and diffusion of the NEV policies have not been fully examined in the extant literature. This article explores the mechanisms driving the diffusion of local financial subsidy policy for NEVs in China. In this context, we aim at analyzing the factors affecting the diffusion of local financial subsidies for NEVs in cities, to explain why some cities have taken the lead in adopting local financial subsidy policies for NEVs, while other cities have lagged behind. Based on a data set of 286 cities in China from 2009 to 2016, and with event history analysis (EHA) to analyze the strategic behaviors of local governments, we found that the number of the city's neighbors that have adopted the NEV policy, the financial incentive policy of the provincial government, the administrative ranking of the city, the city's financial situation and innovation capacity have a direct impact on whether the city adopts a local financial subsidy policy for NEVs. This study has practical implications for policymakers in designing and promoting the spread of NEV policies.

What Affects the Diffusion of New Energy Vehicles Financial Subsidy Policy? Evidence from Chinese Cities