China adjusts NEV tax break policy: PHEV must exceed 100 km electric range
Three Chinese government departments—the Ministry of Industry and Information Technology, the Ministry of Finance, and the State Taxation Administration—jointly released new technical requirements for new energy vehicles (NEVs) eligible for purchase tax incentives in 2026-2027. The announcement on October 9th raises standards, particularly for plug-in hybrid vehicles, which must now achieve at least 100km of electric-only range.
“These adjustments align with rapid improvements in NEV range and extended-range technology, ensuring policies keep pace with technological progress,” said Cui Dongshu, Secretary General of the China Passenger Car Association, to Chinese media NBD. “By raising technical thresholds, the government is guiding companies to increase R&D investment, eliminate outdated products, and shift the industry from scale expansion to high-quality development.”
Key Policy Changes
For Pure Electric Vehicles
- Energy consumption must not exceed limits specified in the new national standard GB 36980.1-2025
- The standard is approximately 11% stricter than previous requirements
- Passenger vehicles exceeding 3,500kg will follow the 3,500kg vehicle consumption standard
For Plug-in Hybrid Vehicles
- The electric-only range increased from 43km to at least 100km
- Fuel consumption requirements are set at less than 70% of standard limits for vehicles under 2,510kg
- Fuel consumption requirements set at less than 75% of standard limits for vehicles 2,510kg or above
- Electric energy consumption must be less than 140-145% of standard limits, depending on vehicle weight
Implementation Timeline
The new requirements take effect January 1, 2026. Vehicles already listed in the tax exemption catalogue before December 31, 2025, that meet the new technical requirements will automatically transfer to the 2026 catalogue. Those failing to meet requirements will be removed.
Manufacturers wishing to include non-compliant vehicles in the first 2026 tax exemption catalogue must complete applications by December 12, 2025.
Market Impact
Industry analysts quoted by NBD estimate approximately 40% of current plug-in hybrid vehicles on the market have electric ranges below the new 100km requirement. Experts predict manufacturers may conduct end-of-year sales to clear inventory of these soon-to-be non-compliant models.
Most premium plug-in hybrids already exceed the new threshold, with models like the Aito M5 (230km electric range), BYD Tang DM-i (175km), and Li Auto L8 (225km+) comfortably meeting requirements.
Some popular entry-level models, such as the BYD Qin Plus (some variants), Qin L (some variants), and Geely Galaxy A7 (some variants), face the issue of not being eligible for purchase tax exemption in 2026.
