China to reduce export tax rebate for electric vehicles

The Ministry of Finance and the State Tax Administration announced new export tax refund rates for rechargeable, battery, hybrid and fuel cell electric vehicles, called "new energy vehicles" (NEV).

Accordingly, the tax refund rate on the export of electric vehicles was reduced from 13 percent to 9 percent. For internal combustion engine vehicles, the 13 percent tax refund rate was kept constant.

It is predicted that applying low tax rebates to electric vehicles will increase the costs of Chinese automobile manufacturers and increase the prices of Chinese-made vehicles in foreign markets.

Electric vehicles have recently become an important engine of China's growing exports. According to data from the China Association of Automobile Manufacturers (CAAM), in the first 9 months of 2026, Chinese manufacturers exported 8.2 million vehicles, 48.8 percent of which were electric vehicles.

China's electric vehicle exports increased by 160 percent in September compared to the same period last year, reaching 571 thousand, while exports of internal combustion engine vehicles increased by 12 percent to 482 thousand in the same period.

Tax refunds are being cut for exports of new energy products

It is observed that tax refunds have been cut in three "new energy" class product categories in China. Previously, the tax refund rate paid on the export of lithium-ion batteries was reduced from 13 percent to 9 percent and then to 6 percent. The tax refund paid on solar energy equipment exports was abolished in December 2026. The tax rebate on batteries is also planned to be abolished in January 2027.

Recently, China has been the subject of criticism that it has reduced prices in these countries and caused unfair competition for the domestic industry by exporting the excess production it created with government incentives in critical industries, especially products in these three categories, to foreign markets.