The Chinese government this week said it will extend tax exemptions on purchases of new-energy vehicles (NEVs) by a further two years to help the segment rebound from a year long decline.
Sales of NEVs in China fell by 4% to 1.206m units in 2019, with strong growth in the first half of the year offset by a sharp decline in the second half after the government slashed subsidies at the end of June.
First quarter 2020 sales are estimated to have declined by over 50% to 114,000 units, based on data released by the China Association of Automobile Manufacturers.
The tax exemption on NEVs, including electric, plug in hybrid and fuel cell powered vehicles, was scheduled to expire at the end of 2020.
By extending it for a further two years, the government hopes sales will stay on course to account for 20% of the total vehicle market by 2025.
A joint statement by the ministries of finance, state taxation administration, and industry and information technology, confirmed the tax exemption would continue until 31 December 2022.
According to local reports, the decision to extend the tax exemption was made last month at a state council meeting in which the government also agreed to implement a broad framework of fiscal and financial policies to help stimulate domestic consumption and help businesses recover from the COVID19 pandemic.