China has plans to increase car sales and may keep the tax break for electric vehicles (EVs).
Beijing (Reuters) -China said Thursday that it would consider extending a tax break for electric vehicles and lay out plans to build more charging stations and encourage lower charging fees. These steps are meant to increase the number of cars people buy.
The plans, which were announced by the Ministry of Commerce in a joint statement with 16 other departments, made shares of Chinese automakers go up. Geely’s shares went up 6% and Great Wall Motor’s went up 4%.
In the past few months, strict lockdowns in Shanghai and other parts of the country to stop the spread of the Omicron coronavirus variant have hurt the world’s largest car market a lot.
As part of the new plans, the government cut the tax on buying a car by half, from 10% to 5%, for cars with engines of 2.0 litres or less that cost less than 300,000 yuan ($45,000).
Since 2014, buyers of some fully electric and partially electric cars have not had to pay the purchase tax. The ministry said that there may no longer be a plan to bring it back next year. This confirms what the country’s cabinet said last month.
The tax cut in half has helped the market get back on its feet. Passenger car sales in June were up 22% year on year, reaching 1.9 million units, according to preliminary data from an auto association.
Last month, sales of electric vehicles (EVs) jumped by 130%, to 546,000 units. This was nearly 30% of all vehicle sales. The sales of market leader BYD Co (OTC:BYDDF) Ltd more than tripled to 134,000.
The statement from the commerce ministry didn’t say anything about extending subsidies for what China calls “new energy vehicles.” This is a programme that has been credited with giving the sector a big boost in growth.
In May, Reuters said that the government was talking with automakers about making the programme last longer.
The ministry also said it would try to get people to replace older cars, give people more help in getting credit to buy cars, and get rid of barriers to selling used cars between provinces.
