The preferential tax policy for the purchase of new energy vehicles is expected to continue, and most car buyers can save more than 10,000 yuan

The trend of subsidies for new energy vehicles has been irreversible, and this year will be the last year for the implementation of subsidy policies for new energy vehicles. However, the Ministry of Industry and Information Technology released a signal of the extension of the preferential tax policy for the purchase tax of new energy vehicles.

On January 18, Xiao Yaqing, secretary of the party group and minister of the Ministry of Industry and Information Technology, presided over the 2022 annual work conference of the inter-ministerial joint meeting. The meeting stressed that it is necessary to implement the carbon peak carbon neutrality goal, compile a roadmap for the green development of the automobile industry, study and clarify support policies such as the continuation of the preferential purchase tax for new energy vehicles as soon as possible, improve the requirements for integral management, and stabilize market expectations.

The policy of exempting new energy vehicles from purchase tax has been extended many times, the policy was first implemented in 2014, and was initially scheduled to expire at the end of 2017, which also directly stimulated the rapid growth of the new energy vehicle market. Subsequently, the Announcement on the Preferential Vehicle Purchase Tax Policy for Continued Implementation issued by the Ministry of Finance and the State Administration of Taxation pointed out that from January 1, 2018 to December 31, 2020, the purchase of new energy vehicles was exempted from vehicle purchase tax, which means that the policy was extended for three years. On March 31, 2020, in order to promote automobile consumption, the relevant policies determined to extend the purchase subsidy and purchase tax exemption policy for new energy vehicles by 2 years to the end of 2022.

According to the plan, the subsidy for new energy vehicles will be officially withdrawn in 2023. Judging from the signal released by the Ministry of Industry and Information Technology, the continuation of the purchase tax exemption policy for new energy vehicles has been basically clear. New energy vehicles exempted from vehicle purchase tax refer to pure electric vehicles, plug-in hybrid (including range extender) vehicles, and fuel cell vehicles. New energy vehicles exempted from vehicle purchase tax are managed through the Catalogue of New Energy Vehicle Models Exempted from Vehicle Purchase Tax issued by the Ministry of Industry and Information Technology and the State Administration of Taxation.

"This is an encouragement for the development of the new energy vehicle market, and the signal released by the Ministry of Industry and Information Technology shows that although the state has clarified the decline of subsidies, it still has a certain support for the new energy market." Although the new energy vehicle market has gradually shifted to market-oriented, it is also a gradual process. After the complete withdrawal of subsidies, the purchase tax exemption policy is a huge policy preference, which is conducive to promoting the continued growth of the new energy vehicle market, and this policy can save more than 10,000 yuan for most new energy car buyers. Cui Dongshu, secretary general of the Association, told the first financial reporter today that in the context of the decline of new energy vehicle subsidies, the stable purchase tax exemption policy plays an important role in new energy vehicles, and if the policy is not extended, it will reduce consumers' enthusiasm for car purchases to a certain extent. Judging from the signal released by the Ministry of Industry and Information Technology, the contraction of preferential policies is an inevitable trend, but there is still a process of complete withdrawal, and the extension of the preferential policy of purchase tax is conducive to stimulating consumption.

From the perspective of preferential treatment, taking Chongqing Municipality as an example, data from the Chongqing Municipal Taxation Bureau shows that 72,600 people in Chongqing will purchase new energy vehicles in 2021, an increase of 176% year-on-year, with a total reduction of 1.15 billion yuan in new energy vehicle purchase tax. In other words, consumers who buy new energy vehicles in Chongqing in 2021 will save an average of about 16,000 yuan per person. In 2021, China's new energy vehicle sales reached 3.521 million units, and if the average amount saved by new energy vehicle consumers in Chongqing to buy electric vehicles is a rough estimate, the total reduction of China's new energy vehicle vehicle purchase tax in 2021 is about 56.34 billion yuan.

In addition to the continuation signal of the new energy vehicle purchase tax preferential released by the Ministry of Industry and Information Technology, the new energy vehicle subsidy policy also shows the encouragement of the new energy vehicle market. Although new energy vehicles have made it clear that this year's subsidies will fall by another 30%, the subsidy policy will be officially cancelled next year. However, in the new subsidy policy, it is proposed that the subsidy scale be relaxed from the original expected upper limit of the subsidy scale of 2 million vehicles, and the subsidy will be realized throughout the year. In other words, the subsidy policy for new energy vehicles has been liberalized. Cui Dongshu said that the liberalization of the upper limit of subsidy scale has brought huge incremental space, and the amount of subsidies has increased by at least more than 10 billion yuan, and the pull effect on the automobile market should be extremely obvious.

According to the data released by the China Association of Automobile Manufacturers, the production and sales of new energy vehicles in 2021 reached 3.545 million units and 3.521 million units, respectively, an increase of 1.6 times year-on-year, and the market share reached 13.4%, 8 percentage points higher than that of 2020. A report recently released by the Association of Automobile Manufacturers shows that with the implementation of new energy subsidies, the price of some models has been fine-tuned, and the consumer mentality has also changed, and the demand for new energy vehicles will still be slightly affected. However, at present, new energy vehicles continue to be hot, and there is a backlog of large numbers of undelivered orders in the early stage, so most of the sales of new energy models will not be significantly affected by the decline. Originally expected to sell 4.8 million new energy passenger vehicles in 2022, it has now been adjusted to more than 5.5 million units. New energy vehicles are even expected to exceed 6 million, and the penetration rate of new energy vehicles is about 22%.

"Whether the price of subsidized decline models will increase depends on the market supply and demand relationship, if the new energy vehicle market still continues a strong trend, some car companies will increase prices, if the demand is relatively weak, it may be traded at a discount." Cui Dongshu told reporters that most of the new energy vehicle companies are still in a state of loss, the competition in the new energy vehicle market is more fierce, and a small number of car companies have mastered the pricing power. "BYD and Tesla have largely mastered the pricing power, their competitiveness is relatively strong, there is a certain benchmarking role, BYD, Tesla price increases, other car companies are likely to follow." Cui Dongshu said that there is still a long way to go for new energy vehicle companies to achieve profitability.