China will extend a tax rebate on purchases of new-energy vehicles (NEVs) until the end of 2020, a needed boost for hybrid and electric car makers amid a shift by policy-makers away from the combustion engine.
On Wednesday the finance ministry said in a statement that the tax exemption, which was set to expire at the end of 2017, will now run from Jan. 1, 2018 until Dec. 31, 2020 for electric, plug-in petrol-electric hybrid and fuel-cell powered vehicles.
Automakers had concerns over the issue that consumer demand alone will not be sufficient to drive sales without state-backed incentives to attract buyers, and called on the Chinese government to financially support the market.
The Ministry of Finance said the extension would help “increase support for innovation and development in new energy vehicles”, an area where China is hoping it can catch up – and even overtake – more established global automaker rivals.
China’s auto market, the world’s largest, significantly slowed down in 2017, however, NEV sales in January-November jumped 51.4 per cent and are on track to hit a target of 700,000 NEV sales.