China To Cut Annual Taxes On Hybrids And ZEVs

As part of a countrywide initiative to promote more fuel-efficient transportation, China announced that it will stop charging annual taxes for some low- and zero-emission vehicles.

The fee is part of China’s 2012 Vehicle and Vessel Tax (VVT). In addition to taxes for motorcycles, ships and commercial vehicles, the measure set an annual charge for passenger vehicles based on the engine size. Changes to the VVT remove this fee for a select group of vehicles.

“Cars exempted include pure electric commercial cars, plug-in hybrid vehicles and fuel-cell commercial cars, according to a joint statement by the Ministry of Finance, State Administration of Taxation and the Ministry of Industry and Information Technology,” reported the China Daily.

Other “energy-saving cars” will pay only half the normal tax, said the state-run news site. Specific models eligible for either type of tax reduction weren’t listed.

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These vehicle tax breaks are part of China’s efforts to curb carbon emissions and increase alternatively fueled vehicles. The country is already seeing positive results from these programs, said the China Daily, which reported that the country produced three times the normal amount of “new energy vehicles” during the first quarter of 2015.

“In March, the Ministry of Transport set a target of 300,000 new energy vehicles on China’s roads by 2020: 200,000 new energy buses and 100,000 new energy taxis and delivery vehicles,” stated the China Daily.

“The Ministry of Commerce also announced earlier this year that China will continue to encourage the construction of charging facilities in cities and implement tax exemptions and subsidies for car purchases.”

SEE ALSO: Volkswagen To Build 20 New Electrified Car Models For China

Carmakers around the world will be tracking to see if these initiatives translate to more sales, which some have said are lacking disproportionately in China.

“The question we are all a little bit worried about is the fact that electric cars are not taking off in China, while in other markets they are taking off,” said Nissan CEO Carlos Ghosn last month. “The consumer’s not buying.”

Tesla Motors has also struggled with sales in recent months in China, though CEO Elon Musk has previously said the electric vehicle market there could eventually match sales numbers of the U.S.

Volkswagen has also noted a strong potential there, announcing earlier this month that the company plans to build more than 20 electrified vehicles specifically for China.