China to End Vehicle and Vessel Tax Breaks for Energy-Saving Cars and Plug-In Hybrids From Jan. 1, 2027

China's Ministry of Finance, State Taxation Administration and Ministry of Industry and Information Technology have issued a notice adjusting vehicle and vessel tax incentives for energy-saving and new-energy vehicles, specifying that from January 1, 2027, the half-rate vehicle and vessel tax policy for energy-saving cars will be scrapped and the tax exemption for plug-in (including range-extended) hybrid vehicles will be cancelled, according to Jiemian News. The report cited interviews indicating that by the end of 2025, China had 43.97 million new-energy vehicles on the road, accounting for 12.01% of total vehicles; industry experts said battery-electric and hydrogen fuel-cell zero-emission passenger cars remain the long-term strategic focus, while transitional technologies that use internal combustion engines—such as plug-in hybrids, range-extended vehicles and fuel-saving hybrids—have largely passed their industry cultivation phase.