China will extend subsidies and tax breaks for new-energy vehicle purchases by two years to bolster the world’s largest electric car market amid the double whammy of a prolonged auto sales slump and fallout from the Covid-19 pandemic, reported Caixin.
The State Council, China’s cabinet, announced the two-year extension Tuesday, providing price subsidies to makers of new-energy vehicles (NEVs) and waiving car-purchase taxes for consumers until the end of 2022.
NEV producers can get government subsidies of as much as RMB 25,000 ($3,500) per vehicle. Buyers are exempt from the 10% purchase tax levied on gasoline cars. Both policies were to expire at the end of this year.
China introduced incentives including preferential taxes and subsidies for NEVs a decade ago, spurring explosive growth in the market. But the government support has long been criticized for undermining market rules and encouraging dodgy practices such as subsidy fraud.