China waives purchase tax on electric cars. Will it boost electric car sales?

China has decided to wait its 10 percent purchase tax on electric cars. Electric car sales haven't been stellar recently, but this waiver is the country's policymakers' latest effort to address China's energy independence issues.

|
Petar Kujundzic/Reuters/File
A man gestures as he walks past a billboard-sized photo of the Tesla Model S car, outside the boarded-up Tesla's first China flagship showroom at an office-shopping complex in Beijing August 23, 2013. China has decided to wait its 10 percent purchase tax on electric cars.

After a slow start, electric cars could take another step forward in China as the country decides to waive its 10 percent purchase tax on the vehicles.

It's the latest effort by the country's policymakers to address China's pollution and energy independence issues.

Electric car sales have been abysmal in China while those in the US, Europe and Japan have taken off over the last few years.

Even though China has long offered healthy subsidies against the purchase of electric cars (up to $18,400 in some cases), consumer concerns over price, convenience and reliability have resulted in incredibly low sales figures--despite China being the world's biggest automotive market.

Even so, many companies--including Tesla Motors--still believe Chinese consumers will warm to electric vehicles, and have set their sights on the country to profit from any future growth.

China's government has done much to spur demand for the models in the last year or so, from extending its subsidy policy to limiting the sales of regular vehicles in some cities, where pollution is particularly bad.

According to Bloomberg, China's new tax break covers "new energy autos" – a term encompassing electric cars, plug-in hybrids and fuel-cell vehicles.

Vehicles will avoid a 10 percent purchase tax from September 1 until the end of 2017.

Timing couldn't be better for companies like Tesla Motors, BMW and Volkswagen, all of whom are either selling or intend to sell electric cars in the country.

Tesla began trading in China back in April, and while the company has its hands full with trademark trolls and dealing with minor issues, Chinese media reports suggest Tesla has sold around 1,300 vehicles so far.

Tesla's pricing of the Model S is already considered competitive in China, as Elon Musk stated the company would not "rip off" its Chinese customers by adding a healthy profit margin over existing import taxes and sales taxes, like some other companies do.

BMW will begin selling its i3 electric car from September--just in time to take advantage of the tax break--while Volkswagen intends to sell its e-Up electric car too.

China’s Science and Technology Minister, Wan Gang, believes that more "preferential policies for electric vehicles" may be on the way over the coming years, helping the country's growing energy-saving and pollution-reducing goals.

He says that more work is needed to build infrastructure, but that electric vehicles are "high on [China's] agenda".

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to China waives purchase tax on electric cars. Will it boost electric car sales?
Read this article in
https://www.csmonitor.com/Business/In-Gear/2014/0713/China-waives-purchase-tax-on-electric-cars.-Will-it-boost-electric-car-sales
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe