Electric cars: Beijing extends exemption from 5 per cent purchase tax to end of 2023 in boost for sector

Name: China’s largest shipment of electric vehicles sets sail from Shanghai port
Uploaded: 2022-09-26T11:15:14.000Z
Duration: 1 min 8 s
Description: China’s largest shipment of electric vehicles sets sail from Shanghai port

The exemption from a tax levied on electric vehicle purchases will be extended until 2024, Beijing announced

In the first seven months of this year, the exemption saved Chinese EV buyers 40.7 billion yuan in tax payments

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Beijing began exempting motorists from paying the EV purchase levy in 2014 and planned to phase out the incentive by the end of 2022. Photo: Xinhua

Daniel Ren

Published: 7:15pm, 26 Sep 2022

The exemption from a tax levied on electric vehicle (EV) purchases will be extended to the end of 2023, Beijing has announced, in an apparent effort to further bolster the use of battery-powered cars on mainland Chinese roads.

A statement jointly published by the Ministry of Finance, State Taxation Administration and Ministry of Industry and Information Technology on Monday said buyers of all pure-electric, plug-in hybrid and fuel-cell cars will be exempt from paying a 5 per cent tax next year.

“The policy is in line with expectations,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. “An official announcement can effectively encourage Chinese drivers to opt for electric cars in the near future.”

Beijing began exempting motorists from paying the EV purchase levy in 2014 and planned to phase out the incentive by the end of 2022. But a slowing economy caused by Covid-19 pandemic curbs has prompted top policymakers to extend the tax break as a way of bolstering electric car purchases and reinforcing the country’s decarbonisation drive.

A 5 per cent purchase tax translates to an additional payment of 10,000 yuan (US$1,400) if a driver buys an EV priced at 200,000 yuan.

Tesla and its Chinese rivals – Nio, Li Auto and Xpeng – build and sell smart electric cars priced at more than 300,000 yuan, which feature preliminary autonomous driving technologies, sophisticated in-car entertainment systems and high-performance batteries.

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China’s largest shipment of electric vehicles sets sail from Shanghai port