The China government announced two important 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 aimed at promoting new energy vehicles (NEVs) in rural areas.
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 period, 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 round of NEV promotion measures for rural areas announced in June 2023 is also 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.
Table 2: EV purchase tax exemption policies implemented in China, 2014-2027
Chart 1: China EV unit sales and purchase tax exemption amount, 2014-2022 (CNYb)
Chart 2: China passenger EV unit sales share by price range, 2018-2022
Table 3: Influences of purchase tax exemption policy in four major perspectives
Table 4: NEV promotion policies for rural area in China, 2020-2023
Chart 3: Sales of NEVs for rural area promotions and overall EV sales in China, 2020-2022 (k units)
Chart 5: China disposable income per capita and rural area NEV ASP, 2020-2022
