China’s decision to withdraw tax exemptions on 319 models of NEVs expected to drive the market

As we had published the news earlier that China government had been taking sincere steps towards green car by increasing subsidies on electric vehicles, under the new subsidy rules, which took effect from February 12, 2018, to ensure that a large number of automakers in China initiate producing more electric vehicles with enhanced features on a single charge and make the EVs more affordable. This move was taken by the government so that more and more people could afford EVs and substitute gas fuel cars with them, as this, in turn, would curb the air pollution as well.

The subsidy was applicable to electric vehicles that could travel with a range of 400 kilometres (249 miles) and more on a single charge, to 50,000 yuan ($7,900) from 44,000 yuan. Subsequently, the new rules came into effect that specified at least 150 kilometres on a single charge as a benchmark to be eligible for incentives, which used to be 100 kilometres earlier. This was to boost the production and sale of EVs further while making it more difficult for battery-powered vehicles to qualify for any new incentives under a central government plan.

As was expected, the government subsidies would stimulate the demand for aluminium bodied EVs and significantly help in boosting the range by keeping the body weight low.

Thankfully, these strategies did not fail to benefit the Chinese automakers like BYD Co. and other including BAIC Motor Corp. and Anhui Zotye Automobile Co. while opening a market for aluminium part manufactures and aluminium suppliers.

Recently, China has again stepped ahead with an intention to enhance the benefits for the automakers. Confirming the news on Thursday, May 17, 2018, the Ministry of Industry and Information Technology (MIIT) said that China is going withdraw tax exemptions on purchases of 319 models of new-energy vehicles (NEVs), as no productions or imports of these vehicles were seen till the end of April 2018 from when the list of NEVs exempted from purchase tax was issued in April 2017.

China expects that this new move will further benefit the automakers by boosting the NEV market in China and at the same time will help to phase out older models of vehicles.