China extended a purchase tax exemption on new energy vehicles (NEVs) on Wednesday, a new economic pillar whose lackluster recovery has market analysts screaming for additional stimulus.
The Ministry of Finance announced that NEVs purchased from Jan. 1, 2024, through Dec. 31, 2025, will be exempt from purchase tax up to 30,000 yuan ($4,168).
The ministry stated NEVs acquired between 2026 and 2027 would have their tax halved, up to 15,000 yuan per car.
NEVs—all-battery EVs, plug-in petrol-electric hybrids, and hydrogen fuel-cell vehicles—are exempt from purchase tax until 2023.
At a press briefing, Vice Minister of Finance Xu Hongcai said tax reductions will total 520 billion yuan in 2024-2027.
A June 2 Cabinet meeting announced that authorities would extend and optimize the tax exemption and investigate NEV development measures.
The incentives put NEVs, a hallmark of big-ticket purchasing, at the forefront of a broad-based attempt to revive growth in the world’s second-largest economy, which is losing momentum after a strong start.
Incentives helped local NEV players like BYD (002594. SZ), Li Auto (2015. HK), and Nio (9866. HK) grow.
After the government removed a decade-long subsidy for EV purchases, automakers like Tesla (TSLA.O) cut prices to preserve market share and extended the purchase tax exemption, boosting NEV sales.
Wednesday’s extension is the fourth. The 2014 tax break was extended in 2017, 2020, and 2022.
The China Passenger Car Association reported a 10.5% increase in NEV sales in May. COVID-19 limitations slowed auto production and sales, yet sales rose 60.9%.
This month, the world’s largest auto market’s trade ministry launched a nationwide drive to boost car sales.
Comment Template