Chinese Regulators to Decide Future of Preferential Tax Policy for NEVs

Speaking about what China’s Ministry of Industry and Information Technology has planned for the future high-quality development of new energy vehicles, Xin Guobin, MIIT Vice Minister, said at a Tuesday press conference that a study would be conducted as soon as possible on whether to continue the preferential tax policy for new energy vehicles, scheduled to be discontinued at the end of this year.

Last April, the Ministry of Finance and two other ministries and commissions issued an announcement that from January 1, 2021 to December 31, 2022, all purchases of NEVs would be exempt from vehicle purchase taxes. The scope of NEVs exempted from vehicle purchase tax refers to pure EVs, plug-in hybrid vehicles, and fuel cell vehicles.

Also, Xin Guobin said that the MIIT would optimize the “Corporate Average Fuel Consumption Credits & New Energy Vehicle Credits” management approach, increase the new system of batteries, vehicle operating systems and other breakthroughs, and start city pilots of full electrification of public sector vehicles. It will also continue to improve the standardization system and strengthen safety supervision.

Xin further discussed the development of NEVs in China at the conference. In terms of production and sales, the cumulative sales of NEVs rose sharply from 20,000 units at the end of 2012 to 11.08 million units at the end of May 2022. Since 2015, production and sales have ranked first in the world for seven consecutive years.

In terms of technology, the energy density of NEV power batteries has increased by 1.3 times compared to 2012, and prices have dropped by 80%. From the perspective of corporate brands, Chinese brands occupy six of the top ten best-selling NEV models in the world in 2021. Chinese companies occupy six of the top ten companies in terms of power battery shipments.

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From the supporting facilities, by the end of 2021, China built 2.617 million charging piles and 1,298 battery swap stations, forming the largest charging battery swap network in the world.