The central government’s website, citing a State Council decision, announced that all new-energy vehicles – the Chinese designation for electric, plug-in hybrid and fuel cell cars – would get exempted from the usual 10% purchase levy.
The tax break has a limited availability though – from September to the end of 2017 – and is the latest measure by the Chinese to address the rising issue of pollution. The world’s second largest economy and the biggest single auto market has in recent years seen a rise in the practices aimed at fighting off pollution – which is now among the biggest problems of the country – as well as energy dependence on oil.
“The exemption will help spur demand for electric cars and plug-in hybrids by lowering the purchase cost,” said Han Weiqi, a Shanghai-based analyst at CSC International Holdings Ltd. “Still, it remains to be seen whether the latest measure will have a decisive impact given other types of funding have been in place.”
On the other hand, electric car sales, even with more cities to impose caps on the sales of traditionally powered cars, have seen little traction so far in the country. The buyers are weary of the high acquisition price, also raising serious questions about the range and availability of recharging stations, as well as reliability in time.