China is gradually phasing out key tax incentives that have fueled the development of the world's largest market for cars powered by new energy sources for many years. Now this decision creates additional pressure on automakers and battery suppliers, which are already operating in the face of weakening demand, writes Nikkei.
Since September, lithium-ion batteries used in electric vehicles and plug-in hybrids have been subject to a 2% consumption tax. In September 2027, it will increase to 4%.
At the same time, export privileges are also being reduced: in April, the discount on the tax on the export of batteries for electric vehicles was reduced from 9% to 6%, and in January it is planned to completely cancel it.
At the same time, Beijing retains support for less mature areas, in particular, for sodium—ion and solid-state batteries. This indicates that the authorities are betting on next-generation technologies, rather than further stimulating the already massive segment.
Conditions for buyers are also changing. The tax on the purchase of cars using new energy sources, which should be completely abolished by the end of 2025, now stands at 5%. Starting from January 2028, it will increase to the standard 10%.
As a result, manufacturers may have to either take on some of the additional costs themselves, or pass them on to customers through higher prices.