Smart and Sustainable Electric Mobility
In October, China's NEV penetration at retail stood at 37.8 percent, up 7.6 percentage points from 30.2 percent a year earlier.
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In the January-October period, BYD was No. 1 with a 36 percent share, Tesla was No. 2 with 7.8 percent and Nio was No. 9 with 2.1 percent.
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In the January-September period, BYD took first place with a 36.3 percent share, Tesla was second with 8.4 percent and Nio was ninth with 2.1 percent.
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The document lists 10 measures, three of which are directly related to support for the NEV sector, and specifically mentions support for the battery swap model.
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For a NEV with a pre-tax price of RMB 300,000, consumers will continue to be exempt from purchase tax from 2024-2025, while they will be subject to RMB 15,000 in purchase tax from 2026-2027.
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China's Ministry of Finance (MOF) has provided a more detailed explanation of its future purchase tax policy for NEVs (NEVs), after announcing the policy for the next four years last week.
In a Q&A posted on its website today, the MOF provided details on how the NEV purchase tax will be levied over the next four years.
In short, for a NEV with a pre-tax price of RMB 300,000 ($41,600), there will continue to be no purchase tax in 2024-2025, while in 2026-2027 there will be a purchase tax of RMB 15,000.
On June 21, the MOF announced that NEVs with a purchase date between January 1, 2024, and December 31, 2025, will continue to be exempt from vehicle purchase tax. Still, the exemption amount will not exceed RMB 30,000 per vehicle.
For NEVs with a purchase date between January 1, 2026, and December 31, 2027, the vehicle purchase tax will be levied at half the normal rate, with the tax reduction not exceeding RMB 15,000 per vehicle.
When consumers purchase a NEV, if the invoice for the car and the battery are separate, the taxable price is the price of the body before tax.
In today's Q&A, the MOF provided examples of how the NEV purchase tax will be calculated over the next four years:
For the years 2024-2025, NEV purchase tax continues to be exempted, but the tax exemption amount for each vehicle will not exceed RMB 30,000.
For example, Mr. Li purchases a new energy passenger vehicle that meets the tax exemption criteria on February 5, 2024.
If the sales price of the vehicle is RMB 300,000 (excluding VAT, same below), then the normal vehicle purchase tax rate is 10 percent and his tax amount is RMB 30,000 (30 x 10 percent).
According to the tax exemption policy at this time, the amount of tax exemption he can enjoy is RMB 30,000. Since the vehicle does not exceed the RMB 30,000 tax exemption limit, Mr. Li is not required to pay vehicle purchase tax.
For a new energy passenger car with a sales price of RMB 500,000, the normal tax amount is RMB 50,000 (50×10 percent). According to the tax exemption policy, Mr. Li is entitled to a tax exemption of RMB 30,000 and needs to pay vehicle purchase tax of RMB 20,000.
In 2026-2027, the vehicle purchase tax will be reduced by half, while the tax reduction will not exceed RMB 15,000 per vehicle.
For example, on March 1, 2026, Mr. Zhang purchases a new energy passenger car that meets the tax reduction criteria.
If the sales price of the vehicle is RMB 300,000 and the vehicle purchase tax rate is 10 percent, then the normal tax amount is RMB 30,000 (30 x 10 percent).
According to the policy of 50 percent reduction in purchase tax, the tax reduction is RMB 15,000 (3×50 percent). As the vehicle does not exceed the RMB 15,000 tax reduction limit, Mr. Zhang is entitled to a RMB 15,000 tax reduction and is required to pay RMB 15,000 vehicle purchase tax.
If the sales price of the vehicle is RMB 500,000, then the tax payable is RMB 50,000 (50 x 10 percent). Under the 50 percent reduction policy, the tax reduction is RMB 25,000 (5 x 50 percent), which exceeds the RMB 15,000 tax reduction limit.
According to the policy at that time, Mr. Zhang is entitled to RMB 15,000 tax reduction and needs to pay RMB 35,000 vehicle purchase tax.
CnEVPost would like to remind that the prices of the vehicles in the above examples are all prices excluding VAT.
In China, the basic VAT rate is 13 percent. The prices that car companies are showing to consumers are the prices including VAT.
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From now until 2027, pure electric vehicles will continue to enjoy purchase tax incentives, which will give NIO vehicles a significant advantage over fuel-powered luxury vehicles in terms of purchase costs, NIO said.
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China today announced details of an extension of tax incentives for new energy vehicle (NEV) purchases, and NIO (NYSE: NIO) welcomed the move.
From now until 2027, pure electric vehicles (EVs) will still enjoy purchase tax incentives, which will give NIO vehicles a huge advantage over fuel-powered luxury vehicles in terms of purchase costs, the electric vehicle (EV) maker said in a comment shared with CnEVPost.
With the new EV purchase tax policy in place, NIO's body-battery separation model could significantly help consumers lower the cost of purchasing a vehicle and reduce spending on purchase tax, it said.
The continuation of the purchase tax incentives is a great boon to the shift from fuel vehicles to NEVs and to stimulate auto consumption, NIO said.
Earlier today, China's Ministry of Finance announced that NEVs with a purchase date between January 1, 2024, and December 31, 2025, will be exempt from vehicle purchase tax, but the tax exemption will not exceed 30,000 yuan ($4,170) per vehicle.
For NEVs with a purchase date between January 1, 2026 and December 31, 2027, the vehicle purchase tax will be levied at half the normal rate, with the tax reduction not exceeding RMB 15,000 per vehicle.
The latest policy continues to provide additional support for models like NIO that are battery swap enabled.
When consumers purchase a NEV, if the invoice for the car and the battery are separate, the taxable price is the price of the body without tax, according to the Ministry of Finance's announcement.
NIO's (NYSE: NIO) peer Li Auto (NASDAQ: LI) also voiced support for the new policy earlier today.
Li Auto aims to reach annual sales of 1.6 million vehicles and annual revenue of RMB 500 billion by 2025, Li Xiang, the company's founder, chairman and CEO, wrote on Weibo.
China has provided an additional four years of stable policies, which is great and leaves Li Auto's team with no excuse not to meet its strategic goals for 2025, Li said.
By early 2026, Li Auto's ability to meet the goal will be proven, he said.
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BREAKING: China extends full purchase tax exemption for NEVs until end of 2025
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China's cumulative tax exemptions for NEVs exceed RMB 200 billion by the end of 2022.
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China today clarified its future purchase tax policy for new energy vehicles (NEVs), which is expected to exempt the industry from paying more than $70 billion in taxes over the next four years.
According to preliminary estimates, China's vehicle purchase tax exemptions will total RMB 520 billion yuan ($72 billion) from 2024-2027, Vice Minister of Finance Xu Hongcai said at a press conference today.
China will exempt NEVs with a purchase date between January 1, 2024 and December 31, 2025 from vehicle purchase tax, but the tax exemption for each new energy passenger vehicle will not exceed RMB 30,000, according to an announcement released today by the Ministry of Finance.
For NEVs with a purchase date between January 1, 2026 and December 31, 2027, the vehicle purchase tax will be levied at half the normal rate, with the tax reduction not exceeding RMB 15,000 per new energy passenger vehicle.
To support the development of energy-efficient vehicles, China first began exempting NEVs from purchase tax in 2014, a policy that has been extended several times in the past few years.
The standard vehicle purchase tax in China is 10 percent, which is what traditional internal combustion engine (ICE) vehicles currently face.
By the end of 2022, the cumulative size of China's tax exemption for NEVs exceeded RMB 200 billion, and the annual tax exemption is expected to exceed RMB 115 billion in 2023, Xu said in the press conference.
The vehicle purchase tax exemption policy brings more direct feelings to consumers and has a clear effect on promoting the development of the NEV industry and expanding consumption, he said.
The latest policy will have no effect on NEVs priced below RMB 300,000, and the parts exceeding RMB 300,000 will be subject to vehicle purchase tax, he said.
According to 2022 data, new energy passenger vehicles priced at RMB 300,000 and below account for roughly 87 percent of production, and these limits, in general, will have little impact on consumers and the market, according to Xu.
In addition, Chinese Vice Minister of Industry and Information Technology Xin Guobin said in the press conference that the country welcomes investment from companies from various countries and supports their cooperation with Chinese companies in areas such as solid-state batteries and autonomous driving.
At the same time, China also supports local companies to invest and build factories outside the country to bring China's advanced technologies and products abroad, so that people in more countries can enjoy the fruits of technological progress, Xin said.
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BREAKING: China extends full purchase tax exemption for NEVs until end of 2025
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China's State Council Information Office will hold a briefing at 10 am Beijing time on June 21 on promoting the development of the NEV industry.
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China is expected to introduce policy initiatives to promote the "high-quality development" of the new energy vehicle (NEV) industry in recent days, local media China Securities Journal said in a report today.
The report did not mention details about the possible policies.
A notice posted on the website of China's State Council Information Office today shows it will hold a regular briefing at 10 am Beijing time on Wednesday, June 21, to introduce the promotion of "high-quality development" of the NEV industry and answer reporters' questions.
China's current policy to support the NEV industry is mainly the exemption of purchase tax.
In order to support the development of energy-efficient vehicles, China first started to exempt NEVs from purchase tax in 2014.
The policy originally expired at the end of 2017, but was renewed before its expiration until the end of 2020. In March 2020, China renewed the policy again until the end of 2022.
On September 26, 2022, several Chinese government departments announced in an official announcement that the purchase tax exemption for NEVs would continue until the end of 2023.
On June 2, a Bloomberg report said that China was considering extending the tax exemption for cheaper NEVs for another four years.
One of those measures could be extending the purchase tax exemption for electric and plug-in hybrid vehicles that cost less than 300,000 yuan ($42,910), according to the Bloomberg report.
Hours after that Bloomberg report was published, state broadcaster CCTV reported that a State Council meeting mentioned that China would extend and optimize the vehicle purchase tax exemption for NEVs.
The upcoming press conference on June 21 may be related to the extension of the NEV purchase tax exemption policy.
Before this year, China also offered state subsidies for NEV purchases, and they were not renewed when they expired at the end of last year, although some local governments have offered subsidies to local residents for their purchases from time to time.
Following the withdrawal of state subsidies, growth in China's NEV industry has slowed significantly so far this year.
From January to May, retail sales of NEVs in China were 2.42 million units, up 41.45 percent year-on-year, according to the China Passenger Car Association (CPCA). For comparison, the growth rate for the same period last year was 117.21 percent.
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China to extend and optimize NEV purchase tax exemption policy, says State Council meeting
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Shanghai, home to Tesla's China factory and NIO's global headquarters, has seen NEV penetration reach about 50 percent.
To observe China's electric vehicle (EV) transition, Shanghai, home to Tesla's China factory and NIO's global headquarters, is a must-watch city, and something interesting is happening.
In the monthly auction for fuel car license plates, 113,722 people participated in the auction in May, down 6,492 from the previous month, according to the information posted Saturday by the Shanghai government on its official WeChat account.
The number of participants was at a new low since February 2015, or a 99-month low, data compiled by CnEVPost showed.
The number of available license plates in May was 13,214, implying a winning rate of 11.6 percent.
The auction had the lowest winning price of RMB 92,400 ($13,170) and an average price of RMB 92,547, an increase of RMB 135 from RMB 92,412 the previous month.
Shanghai usually holds license plate auctions for fuel cars on the third Saturday morning of each month, with the local government announcing the results in the afternoon.
The event is one of the most watched locally until EVs are accepted by residents, as winning the auction is so difficult that many may have to try for two or three years before they succeed in winning the bid.
In 2022 and before, Shanghai was offering free license plates to consumers who purchase plug-in hybrid vehicles (PHEVs) as well as battery electric vehicles (BEVs) to encourage the growth of the NEV industry.
Starting in January 2023, PHEVs are treated the same as conventional internal combustion engine vehicles (ICEs), and consumers will need to obtain license plates through the bidding process in order to register such vehicles in the city.
Shanghai's license plate auctions date back to the 1990s, and the event is currently organized by the Shanghai International Commodity Auction Co Ltd (SICA).
Those wishing to participate in the auction need to first submit an application to the SICA and only after qualifying are approved can they participate in the monthly auctions.
Data from the SICA obtained by CnEVPost dating back to January 2010 show that the number of participants in this month's Shanghai license plate auction is at a record low since February 2015, when the number was 103,224.
This comes as NEV penetration has continued to rise in Shanghai over the past few years, with about half of the cars registered in the city now being NEVs.
In April, all vehicle sales in Shanghai were 45,897 units, of which NEVs contributed 22,243, or 48.46 percent, according to data released earlier this month by the Shanghai Economic Information Center.
The earliest available data for that sales volume is January 2021, when 74,555 vehicles were sold in Shanghai, of which NEVs contributed 23,000, or 30.85 percent, according to data monitored by CnEVPost.
Shanghai, home to about 25 million people, is the location of Tesla's China factory, which currently has an annual capacity of more than 1 million units, making it the largest factory in the world for the US EV maker.
Tesla Shanghai plant produced 727,000 units in 2022, up 49.7 percent from a year earlier, with an industrial output of RMB 183.9 billion, which represents 23 percent of Shanghai's auto manufacturing output, a local official said earlier this month.
Shanghai is also home to NIO's global headquarters, and the Chinese EV company's delivery center in the city's Jiading Nanxiang is its largest in the world.
In 2021, NIO has the No. 1 market share of 23 percent of all fuel and electric SUVs in Shanghai priced at more than 350,000 yuan, William Li, the company's founder, chairman and CEO, said during a March 25, 2022 earnings call.
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Data table: Shanghai monthly fuel car license plate auction results
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