China’s State Council urged an extension of electric car incentives as the government seeks to stimulate consumer demand for new-energy vehicles.
(Bloomberg) — China’s State Council urged an extension of electric car incentives as the government seeks to stimulate consumer demand for new-energy vehicles.
The foundation for China’s economic recovery is not solid yet, the nation’s state radio reported late Friday, citing a State Council meeting chaired by Premier Li Qiang. China will therefore extend and optimize new-energy vehicle purchase tax exemptions, the report said, without giving more detail.
People familiar with the matter earlier on Friday said an extension was being considered for some clean cars for another four years. One of those measures may be extending the purchase tax break for electric vehicles and plug-in hybrids that cost less than 300,000 yuan ($42,400), one of the people said, asking not to be identified because the details are private.
Cars over that amount are broadly classed as luxury ones in China, so making it easier for people to buy more affordable clean cars would help with the nation’s EV adoption rate and goal of reaching net zero emissions by 2060.
China has been promoting its electric vehicle industry for over 10 years with generous incentives to consumers and subsidies to automakers. Buyers received discounts of as much as 60,000 yuan at one point for purchasing EVs but this incentive ended in 2022. All new cars have a 10% purchase levy but for new-energy vehicles, this hasn’t applied since 2014 and was recently extended until the end of 2023.
Read more: Tesla Started a China Price War That May Destroy Some Carmakers
Even so, lackluster consumer sentiment coming out of Covid has seen overall new cars sales in the country fall. Deliveries in the first four months of this year declined 1.4% versus the same period of 2022.
Deliveries of EVs and plug-in hybrids in January through April rose about 36% from the same period of 2022, but that’s well down on the 128% growth from the same four month period of 2021, according to the China Passenger Car Association.
Decreasing sales have intensified a price war started in China by Tesla Inc. that was followed by most major auto companies. Many carmakers’ earnings have taken a hit.
Read more: Price War Squeezes Chinese Carmakers With No Relief in Sight
–With assistance from Chunying Zhang.
(Updates with government announcement from 1st paragraph.)
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