Beijing may extend national tax exemption for EVs, state TV reports

China state television reported Wednesday evening that the government may extend tax exemptions on electric-vehicle purchases in a bid to boost the auto industry.

The central government is considering extending exemptions by about 200 billion yuan ($30 billion), state television reported, citing a State Council meeting chaired by Premier Li Keqiang.

Policies such as waiving taxes would aim to bolster demand for new energy vehicles and stimulate the used-vehicle market, according to the CCTV report.  

The report spurred a rally in shares of EV makers such as Li Auto Inc., Xpeng Inc., BYD Co. and Nio Inc., as well as key suppliers such as Changzhou Xingyu Automotive Lighting Systems Co. and Tianrun Industrial Technology Co. Contemporary Amperex Technology Co. shares also rose after a share sale.

Government subsidies introduced in 2009 to help the EV industry are already being withdrawn and are due to be phased out completely next year. An exemption on the 10 percent EV-purchase tax is set to expire at the end of 2022.

Car sales in China slowed as the country battled COVID-19 with strict lockdowns that sapped consumer spending. Passenger vehicle sales slid 17 percent in May from a year earlier, and not a single new vehicle was sold in Shanghai in April as the virus gripped the city.

China has said it would halve the purchase tax on low-emission passenger vehicles with no more than nine seats that were sold for 300,000 yuan or less from June to December.