Chinese EV stocks should be enjoying the fruits of a particularly optimistic announcement today. Indeed, this morning China disclosed it would issue $72.3 billion worth of tax breaks over the next four years for the use and purchase of EVs in the country. China’s latest green initiative should help accelerate the country’s transition to an emissions-less travel environment.
However, slowed EV sales in the country have become a major concern in the world’s biggest auto market. Given the Chinese government’s statement earlier this month promising to promote the sector, today’s news shouldn’t come as too much of a surprise. “The extension by another four years beat market expectations,” Cui Dongshu, Secretary General of the China Passenger Car Association, told Reuters.
According to the Ministry of Finance, new energy vehicles (NEVs) purchased in 2024 and 2025 will be tax-free, up to $4,170 (30,000 yuan) per vehicle. This tax break will be halved, limited to $2,085 (15,000 yuan) in 2026 and 2027.
Today’s announcement comes as something of a follow-up to China’s EV subsidy program, which came to a close after more than a decade last year, as well as the current NEV purchase tax exemption, which is set to end at the end of this year.
Chinese EV Stocks Enjoy Short-Lived Boost on NEV Tax Exemption
Despite the promising news for the EV industry in China, Chinese EV stocks are having a mixed day.
While China’s biggest EV makers like Li (NASDAQ:LI), Nio (NYSE:NIO), and Xpeng (NYSE:XPEV) each climbed on the news, the rally was short-lived. Indeed, on the promising news, XPEV, NIO, and LI shares each jumped up between 1.5% and 2% this morning. Currently, though, only Li is still in the green.
LI is up about 3% heading into the afternoon, while XPEV and NIO are down roughly 2% and 4%, respectively, on a relatively bearish day for the markets.
The Nasdaq Composite and S&P 500 are both in the red at the time of writing, down 1.2% and 0.44%, respectively.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
