China considers expanding electric car incentives image

According to Vice Premier Ma Kai, those who opt for a non-polluting electric car might have new incentives on the way, as past measures failed to trigger the expected demand growth.

China, now the world’s biggest car market, is currently in the middle of a pollution crisis, with many of its major cities clouted by smog – and with authorities starting to put pressure on the car sales, citing the growth as one of the factors.

Vice Premier Ma Kai now commented on the website that its country could expand state measures by dropping the current 10% sales tax on new cars for the new-energy vehicles – the official term for electrics, plug-in hybrids and fuel-cell vehicles.

“New-energy vehicles are important for China’s energy dependency, so the government will devote more resources into promoting them,” said Harry Chen, a Shenzhen-based analyst with Guotai Junan Securities Co. “Reducing or exempting the purchase tax will certainly give buyers more reason to buy such cars as it’s quite a lot of money.”

While the central government wants to have 500,000 such vehicles on the roads by 2015, consumer demand has lagged far behind – with only around 70,000 units sold in the last five years. The government also announced it decided to slow down the subsidies reductions – only getting them 5% lower in 2014 and 10% in 2015, while funding will also continue through 2016.

Via Bloomberg