China, the world’s largest car market with a great potential in the field of electric mobility solutions, has announced extension of government support for New Energy Vehicle (NEV) market for one more year.

The Chinese Ministry of Industry & Information Technology (MIIT) has announced that NEVs, including all-electric cars, plug-in hybrid vehicles as well as hydrogen fuel cell vehicles purchased between 1st of January and 31st of December in 2023 will be exempted from purchase taxes.

Apart from the MIIT, China's Ministry of Finance and State Taxation Administration have also confirmed the government’s decision. The decision to extend the government support for the NEV market has apparently been taken to support the manufacturing sector amid ongoing challenging economic situation.

Initially introduced in the year of 2014, the incentive was repeatedly extended. After the previous extension, it was set to expire at the end of 2022. Luckily, the government decided to extend it for one more year.

Industry experts have welcomed the announcement, saying it could effectively encourage potential buyers in the country give preference to electric cars.

Eric Han, a senior manager at Shanghai-based business advisory firm Suolei, added that the incentive would help the industry in sustaining its growth momentum.

According to emerging Chinese media reports, the value of the government incentive for EVs is around 5 per cent of the purchasing price or 10,000 Yuan (roughly US$1,400). The reports also suggest that the Chinese government decided to extend the incentive in order to enter the next year smoothly, even in the midst of all existing difficulties. It is worth-mentioning here that the government is offering some incentives even to some conventional models for the same reason.

NEVs appear to be a bright spot in the national economy of China. Thus it becomes really crucial for the government to support its growth. As per latest estimates, the rate of EV adoption in the world’s most populous country should grow from 25 per cent in August to more than 30 per cent within the next few months. Deliveries are expected to surpass the mark of 6 million units before the end of this year, representing a jump of around 10 per cent from last year.