To boost its low-emissions auto sector, China plans to offer subsidies and tax exemptions for those who buy energy-saving vehicles.

This is only a part of China’s attempt to revive the fragmented auto sector and boost sales of low-emission and environmentally friendly vehicles. This development plan is similar to the one in 2009 when Beijing introduced the tax incentives for cars with 1.6 liter engines or smaller, and also subsidies for rural residents. This action helped boost auto sales and helped China become the world’s largest auto market, surpassing the United States.

The new proposal states that customers who buy EVs or hybrid cars would be exempt from a vehicle purchase tax. EV buyers will also get a sales rebate and a reduction in the value-added tax. The government also plans to subsidize vehicle buyers in rural areas.

In May 2012 the Chinese government said that it plans to invest 2 billion yuan ($315.06 million) beginning this year to help develop energy-saving vehicles and cut carbon emissions. The construction of more charging facilities for EVs is also a plan for the near future.


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