China Maintains Tax Breaks for Over 90% of Existing EV Models

By Editor


China’s Ministry of Industry and Information Technology announced on Monday that more than 90 percent of the country’s current new energy vehicle (NEV) models would retain tax exemptions for purchases, following the unveiling of new technical specifications.

Canalys’ latest research shows worldwide sales of electric vehicles (EVs) grew by 49 percent to 6.2 million units in H1 2023. EVs constitute 16 percent of the global light vehicle market, marking a significant increase of 12.4 percent from the first half of 2022.

Mainland China was by far the largest EV market, with 55 percent of global EV sales in H1 2023, a total of 3.4 million units. This represents 31 percent of all light vehicle shipments in the region, up from 15 percent in the full year 2021.

“China’s growth rate in H1 2023 stood at 43 percent, a notable decrease from the extraordinary 118 percent seen in H1 2022. The end of Mainland China’s EV support scheme caused disruption, uncertainty, and a price war,” said Canalys Principal Analyst Jason Low, earlier.

The updated technical requirements for NEV eligibility outline criteria for purchase tax exemptions beginning in 2024. Pure electric vehicles are expected to possess a driving range of a minimum of 200 kilometers per charge, while plug-in hybrid cars should be capable of running at least 43 kilometers solely on electricity, as per the ministry’s statement.

The regulations also mandate that electric vehicles (EVs) maintain a range attenuation rate of no more than 35 percent under low temperatures. Additionally, the new guidelines extend eligibility for tax breaks to EVs that can facilitate battery swapping, broadening the scope of vehicles qualifying for these incentives, Reuters news report said.

In a concerted effort to bolster the country’s electric vehicle market, China had previously introduced a significant 520 billion yuan ($72.41 billion) tax break package over a span of four years. This extensive financial stimulus package aimed to promote the growth of electric and environmentally friendly vehicles, representing the government’s commitment to fostering sustainable mobility solutions while catalyzing the automotive industry’s sales momentum.

These measures underscore China’s persistent commitment to incentivizing the adoption of eco-friendly vehicles, promoting innovation in the automotive sector, and facilitating the transition towards a more sustainable transportation ecosystem.

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