Governments often provide subsidies for new energy vehicles (NEVs) to enhance environmental quality and energy efficiency. However, the success of these subsidies in improving air quality in the short term depends largely on their ability to replace conventional vehicles. This paper examines the impact of local NEV subsidies in China on vehicle consumption and air quality. By analyzing monthly panel data from 54 cities between 2020 and 2021 using a staggered difference-in-differences (DiD) approach, we find that NEV subsidies boost NEV sales by 62%. The effects are more pronounced among institutional buyers and for high-priced vehicles than among private buyers and low-priced vehicles. However, our results suggest that air quality has not improved as a result of these subsidies, primarily because Chinese consumers have not significantly reduced their purchases of conventional vehicles in the short term.