China to exempt NEV purchase tax in 20242025
Purchase tax exemption amount will be halved in 20262027
Auto shares rally after the announcement

BEIJINGSHANGHAI, June 21 Reuters China unveiled on Wednesday a 520 billion yuan 72.3 billion package to boost sales of electric vehicles EVs and other green cars over the next four years to prop up softening auto demand, sending shares of automakers sharply higher.

The package, widely expected after an earlier government pledge to promote the industry, comes as softening sales in the world39;s biggest auto market has raised concern over economic growth which is losing momentum after a brisk start to the year.

New energy vehicles NEVs purchased in 2024 and 2025 will be exempted from purchase tax amounting to as much as 30,000 yuan per vehicle, with the exemption halving for purchases made in 2026 and 2027, the Ministry of Finance said in a statement.

The total tax breaks will amount to 520 billion yuan, Vice Minister of Finance Xu Hongcai said at a press conference.

The move is an extension of the current policy under which NEVs which include allbattery electric vehicles EVs, plugin petrolelectric hybrids and hydrogen fuelcell vehicles are exempt from purchase tax until the end of 2023.

The extension by another four years beat market expectations, said Cui Dongshu, secretary general of the China Passenger Car Association, adding the costly extension of the exemption suggests additional stimulus measures were unlikely….