China

China Announces $72B Package of Electric Vehicle Tax Breaks

Published JUN 21 2023

Story

Image credit: Rutger van der Maar [via Wikimedia Commons]

The Facts

On Wednesday, China announced its biggest tax break package for electric vehicles and other green energy cars to date. The $72.3B (520B yuan) package will provide incentives to buyers over the next four years in the hopes that it will boost slow sales.
Reuters
Buyers of new electric vehicles in 2024 and 2025 will be exempt from the purchase tax up to a little more than $4K, and the exemption will be cut in half in 2026 and 2027.
The Wall Street Journal
These exemptions continue a policy that was first adopted in 2014, was due to expire in 2017, and has been extended multiple times since.
Benzinga
For vehicles, the standard purchase tax rate in China is 10%.
Benzinga
This announcement comes after top Chinese officials pledged support for electric vehicle adoption in the car industry over the past several months — including the Ministry of Commerce beginning a “Green Cars Going Rural” promotion earlier this month.
Bloomberg.com

Sources Split

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The Spin

Anti-China narrative

China is getting desperate to spark better auto sales and more consumer spending. The PRC's economy, which is the second largest in the world, isn’t growing as fast as it would like, so it’s attempting to artificially increase demand. If this doesn’t work, it may have to rethink its approach to the post-COVID financial world.

Investopedia

Pro-China narrative

Things are going swimmingly for China’s economy, especially in the electric vehicle realm, so, of course, it’s going to continue offering tax exemptions. Sales of Chinese electric vehicles increased 60.2% year on year in May, and the first half of 2023 has witnessed nearly a 50% increase in purchases. The tax exemptions work.

China Daily