According to state-run TV station CCTV, China has declared its intention to prolong the exemptions from purchase taxes for electric vehicles (EV).
The government is also thinking about expanding incentives for EVs, according to Reuters reporting from May.
The annual drop in China’s EV subsidies between 2020 and 2022 was 10%, 20%, and 30%. There may be CNY2,900-5,400 (US$430-800) less incentive to purchase an EV this year compared to 2021. Prior to their expiration, EV subsidies drew criticism.
Over time, subsidies have been extremely effective: According to the most recent data from the China Passenger Car Association (CPCA), the country’s EV sales made up approximately 60% of all sales worldwide in the first half of 2022.
In an effort to boost the post-pandemic economy, the Chinese government earlier in May agreed to reduce the 10% purchase tax for conventional gas-powered vehicles by half. Consumers can get a 5% tax cut this year when they purchase conventional vehicles between June 1 and December 31.
However, the pandemic had a significant impact on consumer demand for automobiles. According to sources, conventional automobile sales increased just marginally after the tax cut went into effect in June.
Due to a lack of lithium and semiconductors, EV sales are stagnating.
The automotive supply chain has reportedly still not entirely recovered from the Shanghai shutdown, but EV deliveries were able to pick up in June as plants started up again.
Within three to five years, auto dealers predict that EV sales in China will reach 50 percent of total sales. However, sources said that the China-US trade war is one of the reasons why carmakers continue to face lithium and automotive chip shortages.
This year, major EV manufacturers have announced solid delivery numbers. Leapmotor and Hozon Nezha outperformed Xpeng, Nio, and Li Auto in July, gaining 133 percent and 177 percent on-year, respectively.
According to sources, although it may take a few more years for output to expand, material shortages will eventually disappear as suppliers and automakers race to invest in manufacturing lithium and other natural resources.
As more and more competitors enter the EV market, supply will also rise.
Along with the top 5 EV manufacturers listed above, car agencies reported growth in the following companies: Feifan Auto (by SAIC), Arcfox (by BAC), Aion (by GAC), and Voyah (by Dongfeng).
