China waives 10% sales tax on EVs to combat smog

Tesla Model S-05

Seen or experienced Beijing’s infamous smog before? The locals may be used to the grey blanket, but it’s a worrying matter nonetheless. China is working to alleviate the issue and one of the measures is to waive a 10% sales tax on electric cars to fight pollution, Bloomberg reports.

New-energy autos (the term for EVs in China), plug-in hybrids and fuel-cell vehicles will be excluded from the levy from September 1, 2014 till the end of 2017, according to a statement posted on a central government website, citing a State Council meeting led by Prime Minister Li Keqiang.

Supporting a strategic and emerging industry like new-energy vehicles is a “win-win” for industrial development and environmental protection, the Chinese government said in the statement. Developing new-energy autos is important for spurring innovation, promoting energy savings and reductions in emissions, and will help to drive domestic demand and nurture new avenues of growth, the notice added.

BMW_i8_022

The tax waiver also applies to imported EVs, so companies like Tesla Motors, BMW and Volkswagen will benefit from it. Tesla began deliveries of its Model S sedan in China this year, BMW will start sales of its i8 and i3 in September, while VW plans to offer an electric version of its up! small car in the Middle Kingdom by the end of this year.

Sounds good, but will it work? China’s central and local governments have funded purchases of new-energy vehicles since 2010, offering subsidies of up to 114,000 yuan (RM58,570) off the price of an EV in Beijing. Despite this, there are fewer than 70,000 EVs on Chinese roads five years after the programme started. The government target was 500k by next year.

“The exemption will help spur demand by lowering the purchase cost. Still, it remains to be seen whether the latest measure will have a decisive impact given other types of funding have been in place,” said Han Weiqi, an analyst at Shanghai’s CSC International Holdings.

Renault Twizy MY 8

The lukewarm demand could be down to charging and range. Traffic jams of epic proportions are common in China, and an EV might not survive the daily battle.

“The State Council is putting electric vehicles high on its agenda because they not only save energy but also avoid atmospheric pollution. Senior officials from the State Council are working on that and I believe very soon there will be more preferential policies for electric vehicles coming out,” said Wan Gang, China’s science and technology minister.

More government support is needed to develop the infrastructure required to promote EV usage, such as building more charging stations that are conveniently located, the minister acknowledged.

Should Malaysia offer incentives to EVs in the same spirit? This year’s NAP 2014 saw the discontinuation of tax incentives for CBU fully-imported hybrids and electric cars, signalling the “death” of the Mitsubishi i-MiEV and Nissan Leaf. The Mitsubishi Outlander PHEV, already in Malaysia for trials, is also in limbo as a result.

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Danny Tan

Danny Tan loves driving as much as he loves a certain herbal meat soup, and sweet engine music as much as drum beats. He has been in the auto industry since 2006, previously filling the pages of two motoring magazines before joining this website. Enjoys detailing the experience more than the technical details.

 

Comments

  • whatever on Jul 11, 2014 at 6:47 pm

    Malaysia is moving backwards as always, thanks to all old and stupid ministers.

    Like or Dislike: Thumb up 40 Thumb down 1
    • kudajawi on Jul 12, 2014 at 11:48 am

      To reduce the car excise duty will cause a big hole bankruptcy economic recession for Bolehland.

      Serious weed for orang kampung there!

      Like or Dislike: Thumb up 2 Thumb down 1
      • kadajawi (Member) on Jul 12, 2014 at 6:30 pm

        Nah. They will just raise GST, income tax and what not. They’ll get your money no matter what, the only question is how. As long as it is cars at least you have the option of lowering the amount you pay by not buying new cars.

        In any case the EEV initiative as well as the tax exemption for CKD hybrids are quite similar to what China is doing. Just that with Malaysia the drop is much bigger, which creates a very weird market. While in other countries incentives are only able to offset the price increase from the hybrid tech a bit, in Malaysia the hybrid is much cheaper than a regular car. That is not in the interest of car makers who want to see regular cars too, and so they don’t give all the tax cuts to the customer (usually, Audi is an exception). Car prices are actually going down, it just were nice if mainstream models were affected too. It can only be a matter of time.

        Like or Dislike: Thumb up 4 Thumb down 1
    • kadajawi (Member) on Jul 12, 2014 at 6:38 pm

      Actually for once I sort of have to disagree. EEV seems to work on reducing car prices. There are a couple of fatal flaws with it, of course. It should not happen behind closed doors. Transparency is important. Why is the tax reduced by how many %? Also more stability is needed. To CKD a car in Malaysia requires some investments, but the current plan only gives cuts for the next 1 1/2 years, and it takes some time to discuss with the government and then to actually start making cars. By the time that is done the time is up, and with this frickle minded government it is anyone’s guess what will happen next.

      Like or Dislike: Thumb up 3 Thumb down 0
    • pondan on Jul 14, 2014 at 4:22 pm

      Malaysian also wave (instead of waive) …. wave our hand only and say bye bye…

      thanks to moronic gov.

      Like or Dislike: Thumb up 0 Thumb down 0
  • Jack Maverick on Jul 11, 2014 at 7:14 pm

    I think this is opportunity for us. EVs are just beginning to move into SEA, if we really pick up the slack, we could possibly turn Malaysia into the EV hub of SEA, by building EVs.

    We have all the potential, excess power in our grids, our own ‘salvageable’ car company, established production plants. I think if we move fast and do it right, we can show Thailand, Indonesia and Singapore how it’s done.

    All we have to do is lay the red carpet for Tesla, BMW and gang, give them some space in Iskandar and throw in a few incentives, open season in Sepang for testing, let them build EVs here, modify our infrastructure a bit and… presto! We’ll be exporting EVs to every Asian nation in the next 10 years.

    Like or Dislike: Thumb up 22 Thumb down 0
  • Better than our NAP in promoting EV?

    Like or Dislike: Thumb up 5 Thumb down 1
    • kadajawi (Member) on Jul 12, 2014 at 6:41 pm

      They can only reduce taxes by 10%, while Malaysia has cut like 75% or so. I’d say if it were tweaked a little the Malaysian incentives (thanks to the ridiculous excise duty) are better. Just look at the Mercedes S400L hybrid. That’s quite a price drop.

      Like or Dislike: Thumb up 3 Thumb down 0
      • kadajawi (Member) on Jul 12, 2014 at 6:44 pm

        If they’d say until 2020 EEVs CKDd in Malaysia get a massive tax cut then I think we could have a winner. Ideally it extends way beyond 2020. And make it so that if the government changes the mind they have to compensate for all losses due to the change.

        Like or Dislike: Thumb up 2 Thumb down 0
        • Obviously (Member) on Jul 13, 2014 at 6:42 am

          I agree with this. The EEV part of the NAP does have large potential in bringing down the cost of the really expensive cars but they don’t really affect the really low end models at the moment.

          As for how it will affect the Malaysian automotive scene after 2020, I think it will really depend on the state of Proton and the local scene at that time as well as who’s in charge of formulating the NAP and, to a lesser degree, whether a certain someone is still alive or not. The S400L pricing was a real breakthrough but I think that really has to do with how much the S-class cars are taxed on the way in. It’d be a mistake to expect a price drop of the same proportion, much less magnitude, apply on a car under the 100k ringgit market segment.

          Like or Dislike: Thumb up 0 Thumb down 0
  • fast5 on Jul 11, 2014 at 8:53 pm

    Even without waive tax China still selling way way cheaper then Bolehland.
    “Father of AP” really suck RAKYAT money until we die poor…

    Like or Dislike: Thumb up 24 Thumb down 1
  • Spirior on Jul 12, 2014 at 1:19 am

    Biggest culprits are coal plants, industries and agriculture. For vehicles, there are still single piston diesel engines in use. Passenger cars are at Euro 3 equivalent. 10% is nothing – Chinese consumers are too rich to be concerned about being tree huggers.

    Like or Dislike: Thumb up 2 Thumb down 1
    • kadajawi (Member) on Jul 12, 2014 at 6:50 pm

      They have to be tree huggers, that’s in their own interest. The pollution is really unhealthy. When I was on holiday in China I got sick pretty fast, and until the end of the trip. Once I stepped out of the plane I was pretty much cured.

      Malaysia also has a big pollution problem, just not as bad as China. Standing in a traffic jam in Europe is usually nowhere near as bad as in Malaysia, you can breathe the air from outside. Wouldn’t that be nice in Malaysia too?

      Like or Dislike: Thumb up 4 Thumb down 0
  • Krasher on Jul 12, 2014 at 2:55 am

    Meanwhile in Malaysia, they are still studying how to abolish AP.
    Their pocket is more important than yours. Don’t even mention about fighting pollution.

    Like or Dislike: Thumb up 25 Thumb down 1
  • torque on Jul 12, 2014 at 8:46 am

    Good call for China! As for Malaysia’s minister, greed is in their nature. 1st there is tax exemption on cars of Hybrid 2 liter below, then A6 Hybrid tsunami came. From it the ministers gets smarter thus foresee every manufacturer could churning EV and Hybrid below 2 liter such as BMW, Toyota, Honda, Lexus, Audi, Renault, Tesla, Nissan and Volkswagen. At the end of the day, don’t bother getting your hopes too high for them to abolish it. Even leeches will left your body once they suck enough blood out of you, them…worst than leeches!!

    Like or Dislike: Thumb up 23 Thumb down 0
  • Jack Maverick on Jul 12, 2014 at 12:31 pm

    So much negativity and nonsense.. If you don’t like Malaysia, leave la. It’s a small world now, get a job overseas selling peanuts, probably lead a better life than here.

    Can’t leave? Stuck with loans? Family? Responsibilities? Then stop complaining la, if wanna complain, then give productive and constructive complaints..

    Always blame ministers and government only, I admit they suck, but better yourself and your children first. Focus on education, exposure, don’t get stuck in petty religious feuds and conflicts, so that your damn country has a better future la..

    Look forward, fellow Malaysians..

    Like or Dislike: Thumb up 5 Thumb down 33
    • SamTheDaiLanNgong on Jul 12, 2014 at 1:53 pm

      The malaysia is so miserable because there are so many peoples that have the mentality of you…..

      Like or Dislike: Thumb up 16 Thumb down 2
    • Vader (Member) on Jul 12, 2014 at 1:54 pm

      Who do you think you are? Indon? Dare to ask Malaysian to move out from our country? Otak cacat kah?
      Minister just a wakil rakyat but they are not own this country, this country is belong to Malaysian, understand moron?

      Like or Dislike: Thumb up 16 Thumb down 3
    • Obviously (Member) on Jul 12, 2014 at 3:16 pm

      I am assuming that you’re a Malaysian. But you had better not use the “leave Malaysia lah if you don’t like it here” argument. Why? Firstly, it’s the pet slogan of certain big shots in Malaysia and he is known for making rather discriminatory comments. Secondly, telling people to leave doesn’t really solve anything. Emigration isn’t as easy as it sounds. And this is our home. Where else can we go? And with some sucky people making life at home worse, people are bound to vent their frustrations.

      Still, I know why you said what you said but that’s the general climate of these comment sections. I feel your irritation as well. It’s as if they are hoping to make a difference by shouting out in this space armed with the anonymity of the internet, hoping that their targeted gov official will read it.
      One has to grow some resistance towards the negativity and the nonsense to continue browsing here without being brought down in spirit here.

      I have to agree with the points you made to better ourselves rather than lambasting the governance. Just hoping that I’m not the only one that agrees.

      Like or Dislike: Thumb up 11 Thumb down 0
      • Obviously (Member) on Jul 12, 2014 at 3:22 pm

        Sorry for assuming. Your last statement slipped my mind.

        Like or Dislike: Thumb up 2 Thumb down 0
    • Krasher on Jul 13, 2014 at 1:54 am

      Runaway from your own country only solves your own problem by leaving it to the rest of fellow Malaysians.
      That seems constructive to you?! You better pack up now

      Like or Dislike: Thumb up 4 Thumb down 0
    • torque on Jul 13, 2014 at 8:18 pm

      Wow?! Now why I didn’t think of that? Oh wait…did Gandhi left India when he’s not satisfy of the British government? Did the honourable late Nelson Mandela left South Africa when he’s not approved of the Apartheid system? Did Aung San Suu Kyi left Burma? Like you know me better!!

      Like or Dislike: Thumb up 4 Thumb down 0
  • EnergyAnalyst on Jul 12, 2014 at 2:04 pm

    I wonder coz I don’t know —if the a Chinese government is serious about it, why not get all their government departments officials and employees to use EVs , hybrids, FCV. I am very sure there are more than 500,000 government vehicles needing change by next year…yes/no?

    Lead by example they say …

    Like or Dislike: Thumb up 1 Thumb down 0
  • alldisc on Jul 12, 2014 at 2:26 pm

    thanks a lot to california, who invented the LEV and ZEV.

    http://www.ucsusa.org/clean_vehicles/smart-transportation-solutions/advanced-vehicle-technologies/electric-cars/californias-zero-emission-1.html

    As first enacted in 1990, the ZEV regulation required that two percent of vehicles for sale in California in 1998 and ten percent of vehicles for sale in California in 2003 be zero emission vehicles, such as hydrogen fuel cell and battery electric vehicles

    Like or Dislike: Thumb up 1 Thumb down 0
  • Personar on Jul 13, 2014 at 9:59 pm

    I read some comments here, some souls blame other and goverment for their miserable and hard life, lol. Blame yourself lah for your own stupidity or move yourself and live there to pollution china.

    Like or Dislike: Thumb up 5 Thumb down 5
  • frenzy on Jul 14, 2014 at 8:58 am

    For the largest nation to take a step like this , given it has hit rock bottom in pollution (worst than Msia in fact), this is one to watch.

    China’s planning is known to be real far ahead. Did you all read about the Ordos city? China builds complete cities, decades before ppl move in!
    http://www.thebohemianblog.com/2014/02/welcome-to-ordos-world-largest-ghost-city-china.html

    Something BIG is going down with the EVs and soon!

    Like or Dislike: Thumb up 0 Thumb down 0
 

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