On the Eve of the Ten-Year New Energy Vehicle Purchase Tax Exemption Policy Ending: Many Automakers "Pay Out of Pocket" to Secure Orders, Xiaomi May Invest Over 2 Billion

On the evening of October 26, Chery Automobile announced a purchase tax subsidy plan, which will fully subsidize the cost difference incurred by the adjustment of the purchase tax policy for eligible users, with a maximum subsidy amount of up to 15,000 yuan per vehicle. According to incomplete statistics from reporters, a total of 10 brands have announced cross-year purchase tax subsidy plans, including Zeekr, IM, NIO, Li Auto, ZhiJie, ZunJie, and WenJie, among others.

A "war" of subsidies among car manufacturers triggered by policy changes is underway.

On the evening of October 26, Chery Automobile announced a purchase tax subsidy plan, under which it will fully subsidize the cost difference incurred due to the adjustment of the purchase tax policy for eligible customers. This ensures that users do not bear additional purchase tax expenses for invoices issued across the new year. The maximum subsidy amount for a single vehicle will not exceed 15,000 RMB.

According to the subsidy plan, the applicable models are certain brand products under Chery (Chery, Zunhuang, Exeed, Jetour, iCAR) that meet the technical requirements for the reduction of purchase tax for new energy vehicles in 2026 (pure electric passenger cars, plug-in (including extended-range) hybrid passenger cars). The specific models are subject to the tax reduction vehicle catalog published by the Ministry of Industry and Information Technology.

With the tightening of the new energy vehicle purchase tax reduction policy in 2026, Deep Blue Auto and Xiaomi Auto have recently introduced similar plans. For Deep Blue's entire range of vehicles, if the configuration is locked before 24:00 on November 30, 2025, and due to reasons not attributable to the customer, the vehicle is invoiced and delivered in 2026, a cross-year purchase tax difference subsidy will be provided. Xiaomi stated that "this measure aims to protect the rights of car owners and prevent additional expenses due to policy changes." It is estimated that Xiaomi will invest over 2 billion yuan in this "purchase tax guarantee."

The "uniform" actions of car manufacturers are derived from the announcement on extending and optimizing the vehicle purchase tax reduction policy for new energy vehicles, jointly released by the Ministry of Finance, the State Administration of Taxation, and the Ministry of Industry and Information Technology in 2023. Previously, in 2014, to encourage the development of new energy vehicles, the authorities first proposed exempting pure electric, plug-in hybrid (including extended range) and fuel cell vehicles from purchase tax. This policy has been extended and optimized multiple times, until the content determined by the 2023 policy — between January 1, 2026, and December 31, 2027, the purchase tax on new energy vehicles will be halved, with the tax reduction for each new energy passenger vehicle not exceeding 15,000 yuan. This means that a new energy vehicle priced at 300,000 yuan, if purchased this year, can enjoy full tax exemption, but if purchased next year, a purchase tax of 15,000 yuan will need to be paid, significantly increasing the cost of purchasing the vehicle.

Clearly, the purchase tax subsidy has evolved from a "bonus" to a key "competitive leverage." According to incomplete statistics from reporters, a total of 10 brands have announced cross-year purchase tax subsidy plans, including Zeekr, IM, NIO, Li Auto, Zhijie, Zunji, and Aito.

Facing the critical period of year-end sales, car companies hope to leverage the policy dividend window to boost order growth. In September, the domestic auto market experienced the most intensive "new car launch wave" in history, with over 70 new models hitting the market, covering multiple segments ranging from economy to luxury, and from electric to fuel vehicles, forming a competitive landscape across all categories. As October begins, the pace of new car launches has not slowed down, with several new models being launched in early October to meet fourth-quarter delivery targets.

Cui Dongshu, Secretary-General of the Passenger Car Association, stated that the adjustment of the new energy vehicle purchase tax exemption policy in 2026 (from "full exemption" to "50% reduction") will stimulate consumers to concentrate their car purchases before the end of the year. Coupled with the peak season of "Silver September and Golden October" and the year-end push by car manufacturers, the dual-driven pattern of new energy and exports will be further strengthened. The upgrading of intelligent connected technology and the improvement of market order brought about by "anti-involution" will also support consumer confidence. It is expected that the automotive market will still achieve a slight positive growth in the fourth quarter.

According to data from the China Automobile Dealers Association, in the first half of October this year, the car market saw a 35.4% increase in customer visits compared to the first half of September, and a 12.3% increase compared to the second half of September. Orders increased by 13% compared to the first half of September.

"The current industry still faces multiple challenges, including slow domestic demand growth, inventory pressure that requires caution, sustained pressure on industry profitability, unresolved risks of price wars, and geopolitical impacts on the stability of the supply chain. The economic operation of the automotive industry is still under significant pressure." In response, at the "2025 Automotive Industry Statistical Yearbook Work Conference," Chen Shihua, Deputy Secretary-General of the China Association of Automobile Manufacturers (CAAM), suggested that efforts to advance the implementation of steady growth policies should continue, fully tapping into the potential for market incremental growth, and called for the car purchase tax reduction policy to be phased out in a tiered manner, with a 3% reduction by 2026 and 7% by 2027.

Similar to Chen Shihua's suggestion, at the 2025 World New Energy Vehicle Conference, Zhu Huarong, Secretary of the Party Committee and Chairman of Changan Automobile, expressed his hope that the 5% purchase tax on new energy vehicles, which is set to be implemented next year, can transition smoothly, starting from the off-peak season. For example, the tax could be temporarily suspended in January and February, then increased by 1% each month starting in March, with the full 5% tax coming into effect between June and July. This approach would help better control the industry’s capacity, transportation, and costs.