Business Maverick

Business Maverick

China extends tax breaks for new energy vehicles until 2027

China extends tax breaks for new energy vehicles until 2027
SAIC-GM-Wuling Automobile Co. electric vehicles charging in a parking lot in Liuzhou, China, on Monday, 17 May 2021. (Photo: Qilai Shen/Bloomberg)

China extended tax breaks for consumers buying clean cars through 2027 in an effort to bolster its electric-vehicle industry, where the pace of sales has slowed.

The move, announced at a briefing in Beijing on Wednesday, is the latest in a series of steps to lift sales and production in the world’s biggest EV market. 

Shares in industry leaders shifted higher, with BYD Co. gaining as much as 1.5% following three days of losses. Li Auto Inc. added more than 3% in Hong Kong, while Nio Inc. climbed as much as 6.1%. Top battery maker Contemporary Amperex Technology Co. Ltd. rose 1.1% before paring its gain to just 0.1% as of 10.46am local time. 

China’s Ministry of Commerce launched a “Green Cars Going Rural” campaign on 15 June to promote EV adoption, particularly in the countryside, while the State Council and other agencies have called for stabilizing car consumption and building charging infrastructure.

Deliveries of EVs and plug-in hybrids in China rose about 41% from January through May, according to the country’s Passenger Car Association, much slower than the 120% growth for the same five-month period last year. The letup has come despite many automakers cutting prices to grab market share, a trend triggered by Tesla Inc. 

New cars are generally subject to 10% sales tax, but that hasn’t applied to clean-energy vehicles since 2014, a policy recently extended through 2023. Wednesday’s announcement pushes that date back to the end of 2025 for clean cars under 300,000 yuan ($41,700) that don’t seat more than nine people, while cars under 150,000 yuan will get further support to the end of 2027. 

Bloomberg News previously reported that China was considering the extensions. DM

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