As new energy vehicle sales look set to rise, China on the verge of implementing vehicle tax exemption policies

Earlier this week, the Ministry of Finance, State Administration of Taxation and Ministry of Industry and Information Technology announced that it will exempt vehicle purchase taxes for new energy vehicles, Economic Observer News reported today. The tax exemption will begin on next month and last until the end of 2017. The government hopes to utilize the exemption to help promote the development of the new energy vehicle market in China.

According to studies, combined annual new energy vehicle production capacities for Europe, the US, Japan, South Korea and China is predicted to account for nine percent to 20 percent of all passenger automobiles manufactured; those rates are equivalent to 1.2 million to 2.4 million vehicles. Some analysts propose that the government should go beyond implementing favorable taxation policies and also work on establishing a better system to help guide the development of the fledgling new energy vehicle market.

With increasing environmental and traffic issues, the global industry as a whole have been put under pressure to conduct R&D and marketing work on new energy vehicles. Governments across the world have are also been focusing attention on their domestic new energy vehicle industries, and are working to promote rapid development.

According to statistics from the Beijing Yayuncun Automobile Market, at the end of last year, there were over 400,000 new energy vehicles globally. China has the third largest number of new energy vehicles in the world, placing only behind the US and Japan. There are 174,000 new energy vehicles on American roads, followed by 68,000 vehicles in Japan and 45,000 in China.

According to research statistics from Navigant, the global electric vehicle market is expected to grow by 86 percent, with approximately 346,000 EVs predicted to be sold by the end of the year. By that time, there will be over 700,000 new energy vehicles globally.

Aside from exempting new energy vehicles from the purchase tax, the government has also taken other steps to help expand the market. Recently, the National Development and Reform Commission enacted legislation that would lower electricity prices for houses or apartment complexes with charging infrastructure. The government also cancelled individual regional new energy vehicle subsidy policies in order to implement unified national subsidy standards, as well as introduced new favorable tax policies.