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Diversified incentives to boost vehicle electrificatio

China’s long-hailed Energy-Saving and New Energy Vehicles Industry Development Plan (2012-2020), finally released by the State Council after it was delayed for close to two years, highlights all-round incentives to boost various links of the new energy vehicle industry chain.

The Plan has put forth stimulating and incentive guidelines in fiscal, financing, taxation and social policies to foster the burgeoning industry after acknowledging the limits of the previous subsidy-led incentive scheme.

The Plan emphasizes, after numerous revisions, on more fiscal support for the R&D of energy-saving and new energy vehicle technology innovations through the central government. Additionally the Plan encourages investment and financing into the industry from a variety of channels including financial institutions and private venture capital funds.

Taxation incentives are also expected to boost initiatives of fuel-efficient and new energy vehicle makers and component manufacturers. These would include high-tech corporate income tax preference and exemption of business tax related to NEV R&D, technology transfer and so forth.

To boost sales of energy-saving and new energy vehicles, subsidies will be offered to public service institutions and private consumers. BEVs, PHEVs, mild and full hybrids will also be eligible for tax breaks, although specifics are not mentioned in the Plan. Analysts believe that specific subsidy schemes and tax incentives will be released soon in the follow-up implementation measures to be worked out by relevant central government departments and local governments.

The Plan also mandates that new energy vehicles will be free from registration, driving and parking restrictions in urban areas to help boost their demand and use.

To cope with the chronicle problem of ineffective implementation, the Plan for the first time calls for the establishment of a cross-department coordination agency in an effort to ensure effective coordination among different government departments and the implementation of the Plan. Departmentalism is said to be the major reason for the long delay in the promulgation of the Plan.

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