​Automakers Offer Subsidies to Offset 2026 New Energy Vehicle Purchase Tax Hike​​

​As a 5% purchase tax on new energy vehicles (NEVs) is set to be implemented next year, several automakers including Xiaomi have announced plans to subsidize the tax difference for cross-year deliveries. Two major factors may be prompting the phase-out of NEV incentives: declining tax revenue and a sluggish economy. Secondly, the shutdown of Nexperia's production due to Sino-US geopolitical tensions has raised supply chain concerns—no automaker can fully avoid the impact if Nexperia’s supply is constrained.

Among traditional automakers, GAC Group's performance continues to face pressure. Revenue for the first three quarters fell 10.49% year-on-year, with losses widening and sales volume declining. BYD has overtaken Tesla to become the best-selling electric vehicle brand in Hong Kong. Geely Auto has listed its products in the UK and is considering utilizing existing production capacity of European automakers rather than building its own factories.

Among emerging EV makers, Li Auto is recalling 11,411 units of its MEGA 2024 electric MPV due to an issue. In intelligent driving capability rankings, Li Auto placed in the middle tier.

​​1. Xiaomi Announces Subsidy for Purchase Tax Difference, Automakers Rush to Stabilize Orders​​

On October 24, Xiaomi Auto announced a cross-year purchase tax subsidy program. Aimed at addressing customer concerns that cross-year deliveries might reduce their eligibility for purchase tax exemptions, the offer applies to all customers who lock in their orders before November 30. The subsidy covers the tax difference, capped at RMB 15,000, and is valid for all three current Xiaomi Auto models.

​​Automakers Subsidize Price Difference Amid 2026 Purchase Tax Change​​

Prior to this, automakers including Li Auto, NIO, Zeekr, and Harmony Intelligent Driving had already launched similar cross-year purchase tax subsidy policies for their new models.

Li Auto announced a tax difference subsidy for its new i6 model, launched in late September, with order locking available until October 31.

NIO also announced a subsidy for its new ES8 model, with order locking available until December 31.

​​Purchase Tax Policy is a Key Variable for Year-End Sales​​

Many brands have launched new models in the second half of the year, hoping to capture year-end NEV market demand. At this time, changes in purchase tax policy become a key factor influencing consumer purchasing decisions. Therefore, NEV manufacturers are unwilling to fall behind.

​​NEVs Have Longer Sales Cycles Than Traditional Gasoline Vehicles​​

Unlike traditional gasoline vehicle sales, which are predominantly spot transactions with immediate invoicing and delivery upon order placement, NEVs involve longer processes from promotion to production scheduling. Low channel inventory leads to significantly extended delivery cycles, which can be up to nearly a year.

Taking Xiaomi Auto as an example, delivery wait times for the SU7—its first model launched in March 2024—once exceeded 50 weeks. According to the Xiaomi Auto App, the current delivery cycle for the SU7 Standard is 32–35 weeks, while the YU7 SUV, launched in June, has a delivery cycle of 45–48 weeks.

​​NEV Purchase Tax Exemption Expires End-2025, Rate Rises to 5% in 2026​​

Currently, consumers purchasing NEVs are exempt from purchase tax, with a maximum exemption amount of RMB 30,000.

From January 1, 2026, to December 31, 2027, consumers will be required to pay a purchase tax at a 5% rate—equivalent to a halved rate—with a maximum tax reduction of RMB 15,000.

​​Scope of NEV Incentives Narrowed Further​​

On October 9, three government departments including the MIIT announced adjustments to the technical requirements for NEVs eligible for purchase tax reductions in 2026–2027. The update raised the energy consumption requirements for both pure electric and plug-in hybrid (including extended-range) vehicles, meaning the range of models eligible for tax exemptions will narrow.

​​Government’s 2025 Target Achieved Three Years Early​​

The authorities had aimed for NEVs to account for 20% of new car sales in China by 2025. According to data from the China Association of Automobile Manufacturers, this threshold was crossed three years early, with NEV penetration reaching 25.6% in 2022. In the first half of 2024, the NEV market share rose to 35.2%.

​​Brief Commentary:​​

Currently, consumers who purchase NEVs enjoy an exemption from vehicle purchase tax and are also exempt from annual vehicle and vessel tax. Additionally, pure electric vehicles avoid refueling, thereby circumventing fuel tax, which evolved mainly from road maintenance fees. In cities with purchase and driving restrictions, NEVs face almost no limitations in terms of market access and road rights.

This article is generated by Jiasou TideFlow AIGC GEO