ALBAWABA – China unveiled a $72.3 billion package of tax breaks on Wednesday to boost domestic demand on Electric Vehicles (EVs) and other green cars for the next four years, Reuters reported.
Shares of Chinese EV manufacturers reportedly rose sharply on the news.
The sector has seen softening sales over the past few months in what Reuters says is the world’s biggest auto market, having kicked off strong in the beginning of the year.
New energy vehicles (NEVs) purchased in 2024 and 2025 will be exempted from purchase tax amounting to as much as $4,171 per vehicle.
The exemptions will halve by 2026 and 202, the Ministry of Finance said in a statement on Wednesday.
The total tax breaks will amount to 520 billion yuan ($72.3 billion), Vice Minister of Finance Xu Hongcai said at a press conference.
"The extension by another four years beats market expectations," Cui Dongshu, secretary general of the China Passenger Car Association, told Reuters.
The costly extension of the exemption suggests additional stimulus measures are unlikely, he added.
Markets have been looking forward to more economic stimulus by the government of China to reinvigorate local demand and stimulate the real estate market.
