China's Ministry of Finance, the State Taxation Administration and the Ministry of Industry and Information Technology issued an official announcement on July 2, adjusting tax incentives for energy-efficient and new energy vehicles (NEVs).
Effective as of January 1, 2027, the 50 percent vehicle and vessel tax cut for eligible energy-saving cars will be terminated. Meanwhile, full tax exemption will no longer apply to battery-electric vehicles for commercial use, plug-in hybrid vehicles and fuel cell vehicles for commercial use. All such vehicles owned before or newly acquired after the policy shift should since then pay the taxes in full.
Given battery-electric passenger cars and fuel cell passenger cars do not have an engine whose volume relates to the tax, those vehicles remain outside the taxable scope.
Launched in 2012, tax incentives have greatly boosted NEV sales and industrial upgrading. Authorities noted the policy adjustment targets a fairer tax distribution amid mature development of NEVs, as sales in China accounted for more than 50 percent of total sales in 2025. Experts said that future preferential policies will likely target small-sized, light and energy-saving green vehicles.
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