The Chinese government announced two critical electric vehicle (EV) industry policies in June 2023. One is a tax exemption and reduction package for EV purchases nationwide, and the other is a series of measures to promote new energy vehicles (NEVs) in rural areas. DIGITIMES Research expects these policies to continue fueling end-market demand and drive local automakers to step up EV investments, enabling China to secure its status as the world's EV leader, according to the latest EV Watch report.
China has extended its EV purchase tax exemptions for the fourth time. The latest package of tax breaks announced in June 2023, compared to the previous three, spans over a longer duration, specifies a maximum amount of exemption, and is implemented in phases. The program has been found to contribute positively to EV sales. The Ministry of Finance (MOF) expects the tax exemptions to amount to CNY520 billion from 2024 through 2027 and keep driving China's EV sales growth, the report's figures show.
The EV purchase tax exemptions will further narrow the price gap between EVs and gasoline cars, encouraging gasoline car owners to transition to EVs. From the perspectives of automakers, the extension of up to four years will allow Chinese automakers to plan long-term strategies and commit more resources to their EV business development.
The round of NEV promotion measures for rural areas announced in June 2023 is China's fourth attempt at implementing such policies. This time, the goal is to keep driving EV penetration into tier-three and tier-four cities. The previous attempts have enabled the annual sales growth of EV models sold in rural areas to outperform the overall EV market in China. Following the policy initiatives, automakers also plan to launch economy EV models priced between CNY29,000 and CNY170,000, narrowing the EV penetration gap between urban and rural areas even more.
