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Lack of charging network dampens consumer enthusiasm

The Chinese government formally announced Wednesday to waive the purchase tax for new-energy vehicles in a bid to support the industry but experts said there is still a bumpy road ahead.

From September 1, 2014 to December 31, 2017, new-energy vehicles approved for sale in the Chinese market, including imported ones, will be free from purchase tax, according to a notice jointly released by China's Ministry of Finance, Ministry of Industry and Information Technology and the State Administration of Taxation Wednesday.

The new-energy vehicles approved for sale in the Chinese market include electric vehicles, plug-in hybrid electric vehicles and fuel cell vehicles.

The three governmental bodies will release a new-energy vehicle catalogue later to specify the vehicles that will be exempted from purchase tax, and automakers as well as vehicle importers can start applying for the preferential tax policy starting now, according to the notice.

The new policy follows a decision made at a State Council meeting on July 9, which said consumers who buy new-energy -vehicles can be exempted from the purchase tax, which is equal to 10 percent of the net vehicle price, from September 1 till the end of 2017.

"The notice shows that the government is supporting new-energy vehicles as it promised, which is a good news for the industry," Gao Jian, an industry analyst at Shanghai-based consultancy LMC Automotive, told the Global Times Wednesday.

In a bid to promote the new-energy vehicle industry, the government has released a number of policies, such as requiring the share of new-energy vehicles to be at least 30 percent in government procurement of vehicles by 2016 and making provisions for additional subsidies for new-energy vehicle purchase.

Several first-tier cities including Beijing and Shanghai have also adopted favorable license plate policy for new-energy vehicles.

With the subsidy and purchase tax exemption, the low-priced domestic new-energy vehicles will become more appealing to customers, but the shortage of charging facilities remains the biggest concern, Gao noted.

Without a stable charging facility network, it will be hard to persuade general customers, he said.

New-energy vehicles have failed to generate enthusiasm among the Chinese consumers due to a lack of charging stations and reliability and driving safety concerns caused by immature technology, according to a research note by global management consultancy A.T. Kearney on China's new-energy vehicle market sent to the Global Times Tuesday.

The new-energy market may bloom for a while with government support but it will not be able to achieve long-term growth without a strong natural demand from consumers, according to the research note.