China could soon scrap the tax credit for EV purchases

China could soon scrap the tax credit for EV purchases

According to some Chinese media reports, sales of cars powered by new energy sources, and especially electric and hybrid cars, are growing so fast in the country that authorities have decided to cut benefits for buying a car. This is reported by the Digitimes portal.

    Image source: myenergi/

Image source: myenergi/

According to the newspaper, in 2022 the Chinese government cut subsidies for purchasing passenger cars powered by new energy sources by 30% compared to 2021, and the subsidies will be completely eliminated on December 31, 2022.

And in the future, the tax-free purchase of cars will also be canceled – now cars from new sources will not have to pay a tax of 10% of their price. The tax exemption for cars powered by new energy sources was introduced in China in 2014 and extended in 2017 and 2020. At the end of July, the Chinese government decided to postpone the deadline again, but did not give any dates.

According to a representative of the China Passenger Car Association, the tax breaks for new vehicle types should end in late 2022 or early 2023, when new energy vehicles will account for 35% of new car sales. As sales of new internal combustion engines decline, the resulting tax losses will have to be offset by taxes on cars powered by new energy sources. However, it is to be feared that the refusal to grant subsidies and the repayment of 10% of the tax, especially in view of the rapidly rising prices, could impair the desire to buy cars without a classic combustion engine.

Another problem is the lack of charging stations. According to Digitimes Research, there is one charging station for every 6 cars in China. This ratio is significantly better than in Europe (12:1) and the USA (16:1), but this number is still too low to provide drivers with a convenient charging infrastructure.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

Add Comment

Click here to post a comment