(Yicai) Oct. 10 -- China has raised the technical eligibility requirements for purchase tax relief on battery electric vehicles and plug-in hybrids for the next two years to push the auto industry toward higher-performance, lower-consumption models.

BEVs must now meet the energy consumption ceiling set in the national standard GB 36980.1-2025, which was published on May 30 and will take effect on Jan. 1, according to a notice jointly issued yesterday by the Ministry of Industry and Information Technology, the Ministry of Finance, and the State Administration of Taxation.

The industry ministry said the higher bar was necessary as EV energy-efficiency has improved and to accelerate adoption of cutting-edge energy-saving technologies.

Plug-in hybrids, including range-extended models, must have a minimum all-electric range of 100 kilometers, much higher than the previous 43 km, along with specific fuel consumption limits, per the notice. Mainstream PHEV models from carmakers such as BYD and SAIC Motor’s Roewe generally exceed the 100-km all-electric range.

The changes reflect rapid technical progress in EV range and extended-range technologies and are intended to nudge producers toward more research and development and product upgrading, phasing out outdated models and fostering higher-quality industry growth, said Cui Dongshu, secretary-general of the China Passenger Car Association.

Automakers have until Dec. 12 to declare models that are currently in the purchase tax exemption catalog that do not meet the new requirements, the notice specified.

China has exempted new energy vehicles from purchase tax since 2014 and extended the policy multiple times, with the latest covering through 2027. In 2023, the tax relief ceiling on NEVs bought between Jan. 1 next year and Dec. 31, 2027 was set at CNY15,000 (USD2,110) per car.

Since 2014, the Chinese NEV market has grown exponentially. In 2015, the country became the world’s largest NEV market and has maintained that position ever since.

In the first eight months of this year, NEV sales in China soared 30 percent to 8.09 million units from a year ago, accounting for 48 percent of all car sales, according to the China Association of Automobile Manufacturers. That is expected to reach 50 percent by the end of this year.

Editor: Futura Costaglione