China is the undisputed leader in EV adoption, and the good times look set to keep rolling as the country extends its EV tax credits!
China has been very aggressive in pushing its citizens to adopt EV technology since way back in 2009, when the country started providing financial incentives to purchase electric cars in the form of EV tax credits. That push began to kind of bite their government in the butt over the years, because so many Chinese folks are making and buying EVs that the program started to get wildly expensive. But the COVID-19 pandemic changed plans for a lot of people, including China, which had had to postpone its plans to phase out those financial incentives. Now, those tax exemptions have been extended for a third time and are set to finally come to a close at the end of 2023.
According to a report in Reuters, these EV tax credits will be worth a total of 100 billion yuan. And indeed, this ongoing incentive plan has helped stimulate the EV market in China – in 2014, about 75,000 electrified vehicles were sold in China, while by 2021 that figure had reached 3.5 million.
But China is wary of over-incentivizing, at least from a financial perspective. Tax cuts do mean that the government gets less funding for future work, after all. Heck, in the first half of 2022 alone, China registered 2.2 million electrified vehicles and lost out on extra tax income from those numbers.
There’s also concerns like what Norway has faced, realizing that its EV incentives did work but to the detriment of its public transportation sector. Other European nations are phasing out their incentive plans as well, so China is in good company here.
As in the US, this plan to roll back financial incentives isn’t a death knell for EVs in China – the country’s southernmost province, Hainan, has said that it will ban the sale of new internal combustion vehicles by 2030, some five years earlier than a similar ban in California.