The Chinese Ministry for Industry and Information Technology has confirmed there is an exemption in place for motorists who purchase an electric car. The exemption came into play on 1 September 2014 and means electric car owners no longer have to pay the usual 10% purchase tax.
The new measure was announced back in July and is seen as an important part of the Government’s environmental protection policies. China is looking to reduce its dependence on fossil fuels while cutting air pollution and the tax break also works to support the development of the nation’s electric car industry by increasing demand for locally produced electric vehicles.
Electric Car Exhibition in China. Image: Google UK
Along with the State Administration of Taxation, the Ministry for Industry issued a notice on 27 August which outlined the make and model of the first 17 electric vehicle types that would be part of the tax break. When the notice was first made public, vehicles from global manufacturers were set to be included but all vehicles exempt from taxation are made by Chinese companies. The exemption will be in place until the end of 2017 with further models likely to be added depending on the success of the program.
The Chinese car market is the world’s largest and it is hoped there will be 5 million electric cars on Chinese roads by 2020. While electric car sales have increased from 2013 levels, the 16,500 units sold in the first half of 2014 is still far behind where the Government’s target is; the Chinese hope to have 500,000 electric cars on roads by the end of 2015 but this now looks unlikely.
Various subsidies have also been offered against the purchase of electric cars since 2010 though these have been solely for domestically made vehicles. For example, a price reduction of up to $18,500 has been put in place for electric cars in Beijing and public institutions have been ordered to use more electric vehicles.
It has been suggested that the Government is also considering an extra tax on gasoline to try and coerce more motorists to switch from traditional cars to the new electric models. At present, not enough electric cars are being sold for the Government’s liking even with the new incentives.