This photo taken on Feb. 24, 2023 shows the assembly line of GAC Aion, an NEV subsidiary of Guangzhou Automobile Group Co., Ltd. (GAC Group), in Guangzhou, south China's Guangdong Province. (Xinhua/Deng Hua)

China will extend its preferential purchase tax policy for new energy vehicles (NEVs) to the end of 2027 as part of the efforts to continue to support the industry, Chinese authorities have said.

Purchase tax will be exempted for NEVs bought in 2024 and 2025, and each passenger vehicle bought will enjoy up to 30,000 yuan (about 4,178.56 U.S. dollars) of tax exemption, according to a statement released by the Ministry of Finance, the State Taxation Administration, and the Ministry of Industry and Information Technology.

For NEVs bought in 2026 and 2027, purchase tax will be halved, and each passenger vehicle bought will enjoy up to 15,000 yuan of tax exemption, said the statement.

The move seeks to support the NEVs sector's development and stimulate automobile consumption, the statement said.

The tax incentive covers fully electric, hybrid, and fuel-cell vehicles that are included on an official list.

Preliminary estimates show the policy will result in a total of 520 billion yuan of tax exemptions and reductions, Vice Minister of Finance Xu Hongcai said at a press conference on Wednesday.

The country first introduced the purchase tax exemption policy for NEVs On Sept. 1, 2014, and extended the policy three times in 2017, 2020, and 2022. The current policy is effective until the end of this year.

By the end of last year, the preferential policy had led to more than 200 billion yuan of tax exemption. More than 115 billion yuan of tax is expected to be exempted this year, said Xu.

Since the 18th National Congress of the Communist Party of China in 2012, China has introduced more than 70 policies and measures to support the NEV industry's development, according to Xin Guobin, vice minister of industry and information technology.

As a result, the country has seen fast growth in its NEV market in recent years.

In the first five months of this year, the NEV output grew 45.1 percent year on year to more than 3 million units, and the NEV sales increased by 46.8 percent from a year earlier to 2.94 million units.

The NEV sales accounted for 27.7 percent of the country's total new vehicle sales, maintaining sound growth momentum, said Xin.

Supporting infrastructure, including charging facilities, has also seen a notable improvement in recent years.

The number of charging piles has increased from less than 100,000 in 2015 to 5.21 million in 2022. By the end of May this year, China's charging piles reached nearly 6.36 million.

However, the market-oriented NEV development in China remains unbalanced and insufficient, with the northeastern and northwestern parts of the country lagging behind, sales of commercial NEVs growing more slowly than that of the passenger NEVs, and the rural market not fully tapped into, said Xin.

He said the above problems will be addressed, and more policies will come out to support the development of the NEV industry.