China Unveils $72 Billion Tax Incentive Package for Electric Vehicle Industry

China announced a massive $72 billion tax incentive package for its electric vehicle industry even as the world's largest automobile market witnessed a slowing of sales growth. Shares of Chinese automobile companies rose following the decision.

Under the plan, new energy vehicles (NEVs) bought in 2024 and 2025 will get the tax break. The electric and other green vehicles buyers will be eligible for purchase tax benefits amounting to as much as $4,170 per vehicle, according to the ministry of finance.

BYD electric car
BYD electric car Wikimedia Commons

Fighting the Auto Slowdown

China has seen a slowdown in the growth of car sales in the country, triggering fears over faltering economic growth.

The Chinese government has been strongly advocating the transition to electric vehicles, and the country is at the forefront of efforts to move away from the fossil fuel-powered vehicles. New

Energy Vehicles include all-battery EVs, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles. Their sales numbers were soft after the government stopped the subsidy programme. Analysts expect sales to pick up steam following the extension of the programme.

Will Spur Growth

"This will aid China's EV growth," Susan Zou, vice president at researcher Rystad Energy, told Reuters. According to her, EVs sales in China are on road to posting a 30 percent growth in 2024.

The Geely Automobile Holdings logo is pictured at the Auto China 2016 auto show in Beijing. Reuters

China is leading the race to replace petrol and diesel engine cars with electric vehicles. The big paradigm change will happen sooner than expected, the relevant data shows. Some stark facts suggest that the era of internal combustion engines will soon be over and how great a role China is playing in the process.