China will extend its favorable policy on purchase tax exemption for new energy vehicles (NEVs) for the next three years which have been included in the list of NEVs to enjoy purchase tax exemption. Those which will be included in the list from January 1, 2018 need to meet four requirements.
“The previous policy on purchase tax exemption will expire at the end of 2017. The country continues to provide such favorable policy in order to stimulate consumers to buy NEVs. Most NEVs are priced at around 200,000 yuan but they can enjoy a reduction of nearly 20,000 yuan thanks to purchase tax exemption, which is quite attractive to consumers.” a staff from BYD said to the reporter.
Some of the four requirements that those NEVs which are to be included in the list from January 1 next year have to meet are adjusted. For example, driving range of pure electric vehicles and passenger vehicles should not be less than 80km and 150km as required in the previous conditions, but now they are required not to be less than 100km and 200km, respectively. Driving range of fuel-cell passenger vehicles, passenger cars, freight cars and vehicles for special purpose is required to be 300km at least.
Noticeably, NEVs, fuel-cell passenger vehicles, passenger cars, freight cars and vehicles for special purpose should also need to meet detailed requirements in terms of technology. Requirements for NEV enterprises are also more specific.
NEV manufacturers’ performance in product quality assurance, homogeneity of production, after-sales service and recycle of battery are considered in the new condition. Vehicle manufacturers which apply for purchase tax exemption are asked to guarantee quality of energy storing equipment like power battery, driving motor and machine controller for consumers.
In terms of recycling of battery, enterprises are supposed to set up a file for each NEV to record the use, maintenance and repairmen during its full-life cycle, and implement traceability information management over NEV battery to record recycling of battery.
“The trend has been very clear. Requirements of purchase tax exemption for NEV will be stricter and stricter for NEV enterprises in the future. As for the market, the country will continue to encourage buying NEV and provide preferential for consumers by reducing purchase tax. In terms of development of the whole industry, China also offers instruction in technology, performance and quality of product and put forward methods of managing battery recycling, which is likely to occur in the future. These measures will be favorable to sound development of the industry.” Industry insiders said to the reporter.
It may be a result of extension of purchase tax exemption policy, some stock in NEV sector such as Yangzhou Yaxing Motor Coach Co., Ltd. (600213.SH), Anhui Ankai Automobile Co., Ltd. (000868.SZ) and Zhongtong Bus Holding Co., Ltd. (000957.SZ) surged significantly when near 3pm and closed with an increase by the daily limit of 10 percent at 3mp yesterday.
In the opinion of a staff from Anhui Ankai Automobile, “In terms of terminal marke, different from sedan, most passenger vehicles are purchased in the name of companies. New energy passenger vehicle are now mainly used in public transportation. But as public transportation is an industry directly connecting with people’s livelihood, NEVs in this field is promising and will see demand in the future. In addition to support from the country, this market will certainly keep good momentum in the future.”
This staff added that NEV sales of this year may be less that of last year due to some policies. But manufacturers won’t always rely on subsidies from the government. They need to gain sustainable development through improving their product quality and core technology and lowering costs.
Translated by Vanessa Chen