BAIC Motor Co Ltd's E150EV new-energy cars in its Beijing factory on July 23, 2014 Photo: IC

 

 

China will begin offering tax breaks for purchases of several new-energy vehicle models produced by Chinese automakers from Monday to boost the nation's green car market amid rising concern over pollution.

According to a list posted by the Ministry of Industry and Information Technology on its website on Friday, the country will stop levying sales tax on 17 electric passenger car models from 11 Chinese automakers including Shenzhen-based BYD Co and Zhejiang Geely Holding Group.

This move is part of China's stimulus policies announced in early August, which allows new-energy vehicles approved for sale in the Chinese market, including imported ones, to be exempted from a 10 percent purchase tax from September 1, 2014 to December 31, 2017.

Feng Shiming, an executive director of Shanghai-based Menutor Consulting, speculated that the tax-free policy may further improve the performance of domestic brands. Calls to BYD and Geely were unanswered by press time.

Partly boosted by previous government stimulus policies, BYD Co has seen its new-energy car business generate revenue of 2.7 billion yuan ($439.5 million) in the first half, a 1,216.67 percent increase year-on-year, according to the company's financial report filed on the Shenzhen bourse on August 25.

There are no imported models on Friday's list, which some analysts said is an attempt to protect homegrown electric car brands.

"In order to let domestic automakers have more time to grab market share, the Chinese government is not likely to include imported vehicles until the first half of 2015," Feng told the Global Times on Sunday.

Foreign carmakers have stronger brand recognition and may present Chinese firms with stronger competition if their prices are able to be cut due to the tax-free policy, Feng said.

But Cui Dongshu, deputy secretary-general of the China Passenger Car Association, had a different opinion.

Cui believed that foreign automakers are not familiar with the procedures so it would take a long time for them to get on the government list.

Competition from foreign companies should not be domestic electric car makers' top concern, Cui told the Global Times on Sunday.

 "The major block is that Chinese consumers' enthusiasm for new-energy cars has yet to be fueled due to a lack of sufficient recharging stations and driving safety concerns caused by immature technology."

China sold 20,477 new-energy vehicles in the first half of the year, which the China Association of Automobile Manufacturers disclosed in early July was 2.2 times more than the figure in the previous year.

 However, this still appears to be an unsatisfactory figure as the State Council in 2012 set a sales target of 500,000 by 2015 and 5 million by 2020.

Li Xin, a 29-year-old Beijing resident who got a driving license this June said he has no intention to buy a new-energy vehicle, despite lots of subsidies for electric cars from local governments and companies.

For instance, Beijing now offers up to 60,000 yuan to buyers of electric cars.

"I will not buy one because I did not see many charging facilities in the city and a battery-powered car does not seem safe enough," Li told the Global Times on Sunday.

US electric car maker Tesla's first battery fire incident reportedly occurred in 2013.

General Motors Co and domestic firm BYD Co have also faced similar problems in the past few years, according to media reports.

Despite the cold market reception, Feng said that the Chinese government's increasing amount of stimulus policies and subsidies would boost the new-energy sector.

In July, China said that government officials would be ordered to use more new-energy vehicles such as electric and plug-in hybrid cars.

By 2016, government procurement of new-energy cars should account for over 30 percent of total vehicle purchases, according to a notice posted by the National Government Offices Administration on July 13.