Tax Free Electrics Cars

Published Date: 11th Jul 2014

China makes new electric cars tax-free. Buyers who purchase full electric cars, hybrid and fuel cell cars will be exempt from paying tax from September to the end of 2017.


China will exempt electric cars and other types of "new energy" vehicles from purchase tax, the government said, as it seeks to reduce pollution and conserve resources. The State Council, or cabinet, explained that buyers of new energy vehicles – fully electric, hybrid and fuel cell cars –would not have to pay the levy from September to the end of 2017, according to a statement. The tax is 10% of the net value of the vehicle, according to state media.

"For achieving industrial development and environmental protection, this is a win-win," the state council said in a statement on Wednesday. The exemption applies to imported vehicles as well as domestically produced ones, the statement said, adding the government would compile a catalogue of eligible models.

Lack of new charging stations and the needs of Chinese consumers – most are first time owners - for big, flashy vehicles have hurt new electric car sales. Policymakers are seeking to get away from state spending to the domestic consumption as a key driver of the economy, which has been slowing down dramatically.

China has tried to increase ownership of electric and hybrid cars to ease massive levels of pollution and reduce reliance on oil imports, but high the prices, lack of infrastructure and consumer reluctance have been hard to overcome. The government has set a target of having five million new electric vehicles on the streets by 2020.

Several foreign auto makers have announced plans to develop environmentally-friendly vehicles in China, despite the currently small market. US electric car maker Tesla Motors has also caused a stir with aggressive marketing and by pitching its imported vehicles to luxury buyers in China, although analysts say they might only find a niche market.

But China has only 70,000 currently in use, the China Daily newspaper reported on Thursday. The central government also offers outright subsidies for electric passenger car buyers, which were set at $5,700 to $9,800 last year, while local incentives can bring the price down further.