Abolition of Purchase Tax on China's Declining New Energy Vehicles (NEV)

COVID-19 Causes 56% Drop in Q1 Sales, Interpreted as China's Government Commitment to NEV Promotion

[Asia Economy Reporter Cho Young-shin] The Chinese government has abolished the 10% purchase tax on new energy vehicles (NEVs) such as electric vehicles, hydrogen fuel cell vehicles, and plug-in hybrid vehicles, whose demand sharply declined due to the novel coronavirus disease (COVID-19), according to the Chinese state-run Global Times on the 23rd.

The Global Times reported that this reflects the Chinese government's intention to support the automobile industry, especially eco-friendly vehicles, which were directly hit by COVID-19. In fact, NEV sales in China in the first quarter of this year amounted to only 114,000 units, a 56.4% decrease compared to the same period last year, the newspaper explained. Sales of regular passenger cars also plunged by 41% compared to the previous year due to COVID-19.

Regarding the abolition of the purchase tax, the Global Times interpreted it as a demonstration of the Chinese government's support for NEVs. However, it analyzed that since the NEV market in China is not yet mature, the removal of the purchase tax is unlikely to have an immediate significant impact on the market. Customer convenience issues such as NEV durability and difficulties in battery charging remain.

In fact, among the 25.8 million vehicles sold in China last year, NEVs accounted for only 4.7%.

This content was produced with the assistance of AI translation services.