China extends tax incentives as NEV sales dip
The Chinese government announced that it will keep in place tax exemptions on new-energy vehicles (NEVs) until the end of 2020.
The Ministry of Finance and the State Taxation Administration said in a joint statement that buyers of NEVs, comprising mainly electric and hybrid vehicles, will continue to enjoy zero purchase tax rates until the end of 2020, as the government looks to maintain strong sales momentum in this segment.
Overall vehicle sales in China fell by 13% to 10.3m units in the first five months of this year following a more than 16% drop in May to 1.9m units. Sales of NEVs also fell in May, by 1.8% to 104,000 units, with cumulative five-month sales rising by a disappointing 44% to 472,000 units.
The central and regional governments have put in place numerous incentives in the last few years to drive up sales of these vehicles, including minimum sales quotas at the beginning of 2019.
The central government is now also calling on carmakers to increase their capacity to build NEVs and improve product technology to broaden the appeal of NEVs.