The Chinese authorities have long been trying to stop supporting the «green» sector of the auto industry, but due to the uneven development of this sector and the general imbalance of the country's economy a decision was made to extend the tax benefits for the purchase of NEV vehicles.
China today is the world's largest producer and consumer of electric vehicles, this position was achieved by the country with the help of a comprehensive program to support the development of the «green» sector of the automotive industry, which includes the so-called NEV cars. The abbreviation NEV stands for New Energy Vehicle, it combines electric vehicles, plug-in hybrids and hydrogen vehicles.
Since the beginning of the last decade, according to Xinhua News Agency, the Chinese government has introduced more than 70 measures to support the development of the NEV sector, the most important for the end user are subsidies and tax incentives (no need to pay 10 percent sales tax) for the purchase of NEV cars. . The subsidies were canceled at the end of last year, but the tax breaks that have been in place since 2014 remain. The Chinese authorities have already extended them three times, in 2017, 2020 and 2022.
For the fourth time, it was decided to extend tax breaks right up to 2027, but with reservations. Until 2025, inclusive, NEV cars with a price of up to 300,000 yuan (3.5 million rubles in translation at the current exchange rate) are exempt from tax, in the period from 2026 to 2027, the price threshold for receiving benefits will be halved, to 150,000 yuan (1 .75 million rubles).
The PRC government explains the extension of benefits by the uneven distribution of NEV cars across the country: in the northeastern and northwestern regions with their agricultural bias, the share of electric vehicles and plug-in hybrids in the sales structure of new cars is about 4%, while in the country as a whole it is approached 40%, the share of electric vehicles at the end of May was 27.7%.
The most popular electric car in China in the first five months of this year, according to CAAM (China Association of Automobile Manufacturers), was the Chinese-assembled Tesla Model Y crossover with 31,054 units sold. (+20.5% compared to January-May 2022), in second place is the BYD Dolphin hatchback (126,993 units, + 163.8%), in the third place is the BYD Yuan Plus crossover (117,531 units, + 208.1%.
It is curious that the interest of the Chinese in low-cost urban electric vehicles is declining: last year's EV segment leader Wuling Hongguang MINI EV (in the title photo) sold 108,274 units in January-May 2023. (-35.5%).
We add that in general, the Chinese economy today is arranged in such a way that it cannot grow without constant (mostly monetary) incentives from the government, which leads to an increase in public debt and other negative consequences. Many experts agree that the Chinese economy is overly dependent on government regulation, and sooner or later this will result in a major systemic crisis.
The centers of this crisis are visible in the automotive industry, in particular, in the example of NEVS and the Evergrande Group holding that owns it, with its astronomical debts, which the Chinese authorities still do not dare to bankrupt and, in fact, are dragging a time bomb on themselves. Through the efforts of the government, the companies Lifan (now Livan) and Zotye were saved, but it turns out that bad business continues to live at the expense of the state, instead of natural competition, manual control and the accumulation of errors come out, the administrative apparatus is gradually becoming too complex and difficult to control, attempts to force its simplification can take on the most dramatic forms.
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