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China Reopens Electric Vehicle Tax Incentives

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Electric Vehicle Charging Station in Shenzhen
Electric Vehicle Charging Station in Shenzen

To promote the adoption of electric vehicles and improve the air quality in China, the government has finally approved reopening electric vehicle tax incentives in the country, but only for Chinese vehicles.

China’s unprecedented economic growth over the last decade has not been without its environmental problems, just one of which has to do with the transportation system. Millions of poorly-regulated automobiles flood the streets, spewing tons of emissions into the atmosphere, including carbon dioxide, carbon monoxide, oxides of nitrogen and sulfur, and soot (PM2.5). The problem has become so bad that some cities have resorted to shutting down traffic, albeit for short periods, to give the air pollution a chance to dissipate. The real solution, however, is to reduce or eliminate emissions-heavy vehicles from the streets, which means that low-emissions plug-in hybrid and electric vehicles will be needed to take their place.

The problem, of course, is that electric vehicles are typically far more expensive than their conventional counterparts. Considering that China is the world’s fastest-growing economy, it should come as no surprise that China is also home to the world’s fastest-growing automobile market. Unfortunately, thousands of used vehicles, that are nowhere close to beneficial for China’s atmosphere, are being cheaply imported, which leaves Chinese automakers and new car importers with a slim market share. To encourage the adoption of low-emissions electric vehicles, China is making them cheaper to buy.

Since September 1, 2014, China is exempting electric vehicles from the 10% automobile sales tax, including those electric vehicles made out of the country, such as the BMW i3 and Tesla Model S. Last month, it was announced that Chinese-made plug-in hybrids and electric vehicles, from a list of seventeen pre-approved models, will be eligible for additional incentives. In Beijing, for example, electric vehicle buyers can get up to 60,000¥ (≈$9,800) off, and plug-in hybrid electric vehicle buyers can get up to 35,000¥ (≈$5,700) off.

Photo credit: Remko Tanis

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