The Chinese government seeks to return the sales of NEV to the level that was before the outbreak of COVID-19, so they are ready to extend subsidies and tax exemption. They will help domestic manufacturers of electric vehicles, as well as those automakers who built car factories in China, and make cars for the domestic market. This undoubtedly applies to the electric vehicle manufacturer Tesla. Buyers of made in China Model 3s may qualify for subsidies and tax exemption.
S&P Global reports, China will extend the subsidies and tax exemption provided for the purchase of new energy vehicles, which was due to be removed by the end of this year, for another two years in a bid to boost consumption of the vehicle, China's Prime Minister Li Keqiang had said during the executive meeting of the State Council held on Tuesday, according to information on the government's website.
Also the Central Government will use fiscal money to compensate the replacement of diesel vehicles in key areas such as Beijing, Hebei and Tianjin, and the exempt of used car VAT tax from May 1 to end of 2023.
Demand for new energy vehicles (NEV) is expected to improve after April, when the country's industrial production growth rate will increase and the country's economy will return to its previous level.
China's NEV output and sales declined by a large 82.9% and 75.2% year on year to 9,951 units and 12,908 units, respectively, in February, due to the outbreak of COVID-19, according to the China Automobile Manufacturers Association. The output and sales in February slid 77.3% and 72.4%, respectively, from January.
NEV production and sales in the country have been declining annually since July last year due to reduced subsidies. Now the situation will change for the better.
The operating rate of the vehicle industry rose to 97% currently, from 60% on February 19, while the rate of returning workers increased to 82% from 50%, China's vice minister from the Ministry of Industry and Information Technology Xin Guobin said on Monday . He added that the production rate of some vehicle companies will continue to fall for some time to come due to rising inventory caused by weak demand.
Currently, some provinces and cities, such as Guangdong, Shandong, Jilin, Hainan, Shenzhen, Ningbo, Hangzhou and Nanchang, have announced policies to increase vehicle consumption, Xin said.
Guangzhou City, the capital of Guangdong Province in southern China, announced in early March that individual consumers would receive a subsidy of 10,000 yuan ($1,425) for the purchase of an NEV unit in March-December.
The program will provide manufacturers and fleet operators with additional time to ensure the necessary financing for projects and procurements.