Vehicle and vessel Tax Reform (from Jan. 1st 2027) to Shift NEV Mix Towards Pure EVs

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Vehicle and vessel Tax Reform (from Jan. 1st 2027) to Shift NEV Mix Towards Pure EVs

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Vehicle and vessel Tax Reform (from Jan. 1st

2027) to Shift NEV Mix Towards Pure EVs BinResearchWang Analyst

+852-220-35496

China to Remove Tax Exemptions for Certain NEVs in 2027, Impacting PHEV

Wei Huang Owners with New Annual Tax Burden Research Associate

The Ministry of Finance (MoF), State Taxation Administration (STA), and Ministry +852-2203-7057

of Industry and Information Technology (MIIT) have jointly announced a reform

of vehicle and vessel tax, effective January 1, 2027, which will remove tax

exemptions for plug-in hybrid electric vehicles (including range-extended

vehicles), pure electric commercial vehicles, and fuel cell commercial vehicles.

Vehicle and vessel tax in China is an annual levy based on engine displacement

for passenger vehicles, with amounts ranging from RMB 60-360 for engines

below 1.0L, RMB 300-540 for 1.0L-1.6L, RMB 360-660 for 1.6L-2.0L, RMB 660-

1200 for 2.0L-2.5L, RMB 1200-2400 for 2.5L-3.0L, RMB 2400-3600 for 3.0L-

4.0L, and RMB 3600-5400 for those above 4.0L. Consequently, owners of most

plug-in hybrid electric vehicles, typically with engine sizes ranging from 1.5L-

2.0L, will face an annual tax burden of RMB 300-660 starting in 2027.

Vehicle Tax Reform to Shift NEV Mix Towards Pure EVs, Boosted by Fast

Charging Innovations

While the announced RMB 300-660 annual tax burden for plug-in hybrid electric

vehicles (PHEVs) is less than 1% of the average vehicle price, we anticipate this