BYD ranks No. 1, Tesla No. 2, and Nio No. 9 in terms of NEV market share in China in 2023.
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Category: China NEV Market
Simply put, consumers who buy NEVs with an invoice amount exceeding RMB 339,000 are required to pay purchase tax. Models that support battery swap get preferential treatment.
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BYD sold 263,066 retail units in China in November, and Tesla 65,504.
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In October, China's NEV penetration at retail stood at 37.8 percent, up 7.6 percentage points from 30.2 percent a year earlier.
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In the January-October period, BYD was No. 1 with a 36 percent share, Tesla was No. 2 with 7.8 percent and Nio was No. 9 with 2.1 percent.
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In the January-September period, BYD took first place with a 36.3 percent share, Tesla was second with 8.4 percent and Nio was ninth with 2.1 percent.
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The document lists 10 measures, three of which are directly related to support for the NEV sector, and specifically mentions support for the battery swap model.
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For a NEV with a pre-tax price of RMB 300,000, consumers will continue to be exempt from purchase tax from 2024-2025, while they will be subject to RMB 15,000 in purchase tax from 2026-2027.
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China's Ministry of Finance (MOF) has provided a more detailed explanation of its future purchase tax policy for NEVs (NEVs), after announcing the policy for the next four years last week.
In a Q&A posted on its website today, the MOF provided details on how the NEV purchase tax will be levied over the next four years.
In short, for a NEV with a pre-tax price of RMB 300,000 ($41,600), there will continue to be no purchase tax in 2024-2025, while in 2026-2027 there will be a purchase tax of RMB 15,000.
On June 21, the MOF announced that NEVs with a purchase date between January 1, 2024, and December 31, 2025, will continue to be exempt from vehicle purchase tax. Still, the exemption amount will not exceed RMB 30,000 per vehicle.
For NEVs with a purchase date between January 1, 2026, and December 31, 2027, the vehicle purchase tax will be levied at half the normal rate, with the tax reduction not exceeding RMB 15,000 per vehicle.
When consumers purchase a NEV, if the invoice for the car and the battery are separate, the taxable price is the price of the body before tax.
In today's Q&A, the MOF provided examples of how the NEV purchase tax will be calculated over the next four years:
For the years 2024-2025, NEV purchase tax continues to be exempted, but the tax exemption amount for each vehicle will not exceed RMB 30,000.
For example, Mr. Li purchases a new energy passenger vehicle that meets the tax exemption criteria on February 5, 2024.
If the sales price of the vehicle is RMB 300,000 (excluding VAT, same below), then the normal vehicle purchase tax rate is 10 percent and his tax amount is RMB 30,000 (30 x 10 percent).
According to the tax exemption policy at this time, the amount of tax exemption he can enjoy is RMB 30,000. Since the vehicle does not exceed the RMB 30,000 tax exemption limit, Mr. Li is not required to pay vehicle purchase tax.
For a new energy passenger car with a sales price of RMB 500,000, the normal tax amount is RMB 50,000 (50×10 percent). According to the tax exemption policy, Mr. Li is entitled to a tax exemption of RMB 30,000 and needs to pay vehicle purchase tax of RMB 20,000.
In 2026-2027, the vehicle purchase tax will be reduced by half, while the tax reduction will not exceed RMB 15,000 per vehicle.
For example, on March 1, 2026, Mr. Zhang purchases a new energy passenger car that meets the tax reduction criteria.
If the sales price of the vehicle is RMB 300,000 and the vehicle purchase tax rate is 10 percent, then the normal tax amount is RMB 30,000 (30 x 10 percent).
According to the policy of 50 percent reduction in purchase tax, the tax reduction is RMB 15,000 (3×50 percent). As the vehicle does not exceed the RMB 15,000 tax reduction limit, Mr. Zhang is entitled to a RMB 15,000 tax reduction and is required to pay RMB 15,000 vehicle purchase tax.
If the sales price of the vehicle is RMB 500,000, then the tax payable is RMB 50,000 (50 x 10 percent). Under the 50 percent reduction policy, the tax reduction is RMB 25,000 (5 x 50 percent), which exceeds the RMB 15,000 tax reduction limit.
According to the policy at that time, Mr. Zhang is entitled to RMB 15,000 tax reduction and needs to pay RMB 35,000 vehicle purchase tax.
CnEVPost would like to remind that the prices of the vehicles in the above examples are all prices excluding VAT.
In China, the basic VAT rate is 13 percent. The prices that car companies are showing to consumers are the prices including VAT.
($1 = RMB 7.2119)
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From now until 2027, pure electric vehicles will continue to enjoy purchase tax incentives, which will give NIO vehicles a significant advantage over fuel-powered luxury vehicles in terms of purchase costs, NIO said.
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China today announced details of an extension of tax incentives for new energy vehicle (NEV) purchases, and NIO (NYSE: NIO) welcomed the move.
From now until 2027, pure electric vehicles (EVs) will still enjoy purchase tax incentives, which will give NIO vehicles a huge advantage over fuel-powered luxury vehicles in terms of purchase costs, the electric vehicle (EV) maker said in a comment shared with CnEVPost.
With the new EV purchase tax policy in place, NIO's body-battery separation model could significantly help consumers lower the cost of purchasing a vehicle and reduce spending on purchase tax, it said.
The continuation of the purchase tax incentives is a great boon to the shift from fuel vehicles to NEVs and to stimulate auto consumption, NIO said.
Earlier today, China's Ministry of Finance announced that NEVs with a purchase date between January 1, 2024, and December 31, 2025, will be exempt from vehicle purchase tax, but the tax exemption will not exceed 30,000 yuan ($4,170) per vehicle.
For NEVs with a purchase date between January 1, 2026 and December 31, 2027, the vehicle purchase tax will be levied at half the normal rate, with the tax reduction not exceeding RMB 15,000 per vehicle.
The latest policy continues to provide additional support for models like NIO that are battery swap enabled.
When consumers purchase a NEV, if the invoice for the car and the battery are separate, the taxable price is the price of the body without tax, according to the Ministry of Finance's announcement.
NIO's (NYSE: NIO) peer Li Auto (NASDAQ: LI) also voiced support for the new policy earlier today.
Li Auto aims to reach annual sales of 1.6 million vehicles and annual revenue of RMB 500 billion by 2025, Li Xiang, the company's founder, chairman and CEO, wrote on Weibo.
China has provided an additional four years of stable policies, which is great and leaves Li Auto's team with no excuse not to meet its strategic goals for 2025, Li said.
By early 2026, Li Auto's ability to meet the goal will be proven, he said.
($1 = RMB 7.1935)
BREAKING: China extends full purchase tax exemption for NEVs until end of 2025
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China's cumulative tax exemptions for NEVs exceed RMB 200 billion by the end of 2022.
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China today clarified its future purchase tax policy for new energy vehicles (NEVs), which is expected to exempt the industry from paying more than $70 billion in taxes over the next four years.
According to preliminary estimates, China's vehicle purchase tax exemptions will total RMB 520 billion yuan ($72 billion) from 2024-2027, Vice Minister of Finance Xu Hongcai said at a press conference today.
China will exempt NEVs with a purchase date between January 1, 2024 and December 31, 2025 from vehicle purchase tax, but the tax exemption for each new energy passenger vehicle will not exceed RMB 30,000, according to an announcement released today by the Ministry of Finance.
For NEVs with a purchase date between January 1, 2026 and December 31, 2027, the vehicle purchase tax will be levied at half the normal rate, with the tax reduction not exceeding RMB 15,000 per new energy passenger vehicle.
To support the development of energy-efficient vehicles, China first began exempting NEVs from purchase tax in 2014, a policy that has been extended several times in the past few years.
The standard vehicle purchase tax in China is 10 percent, which is what traditional internal combustion engine (ICE) vehicles currently face.
By the end of 2022, the cumulative size of China's tax exemption for NEVs exceeded RMB 200 billion, and the annual tax exemption is expected to exceed RMB 115 billion in 2023, Xu said in the press conference.
The vehicle purchase tax exemption policy brings more direct feelings to consumers and has a clear effect on promoting the development of the NEV industry and expanding consumption, he said.
The latest policy will have no effect on NEVs priced below RMB 300,000, and the parts exceeding RMB 300,000 will be subject to vehicle purchase tax, he said.
According to 2022 data, new energy passenger vehicles priced at RMB 300,000 and below account for roughly 87 percent of production, and these limits, in general, will have little impact on consumers and the market, according to Xu.
In addition, Chinese Vice Minister of Industry and Information Technology Xin Guobin said in the press conference that the country welcomes investment from companies from various countries and supports their cooperation with Chinese companies in areas such as solid-state batteries and autonomous driving.
At the same time, China also supports local companies to invest and build factories outside the country to bring China's advanced technologies and products abroad, so that people in more countries can enjoy the fruits of technological progress, Xin said.
($1 = RMB 7.1941)
BREAKING: China extends full purchase tax exemption for NEVs until end of 2025
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