China to offer tax breaks on electric cars, limited mostly to local brands

SHANGHAI Fri Aug 29, 2014 6:08am EDT

SHANGHAI (Reuters) - China said on Friday it would offer tax breaks on purchases of electric cars predominantly made by Chinese automakers, in its latest policy measure to boost green vehicles in the world's biggest auto market, amid rising concern over pollution.

Last month, the official Xinhua news agency reported the government would stop levying sales tax on approved models of green cars from Sept. 1.

The Ministry of Industry and Information Technology posted on its website on Friday a list of 17 vehicles from 11 automakers, including one model each from the China joint ventures of Nissan Motor Co Ltd, General Motors Co and Daimler AG.

The moves comes as China renews its push to popularize all-electric cars and heavily electrified so-called plug-in hybrid cars. The tax breaks aim to spur purchases of those electric cars in China, whose sales have already been subsidized by official purchase rebates.

China last year renewed private-buyer subsidies for "new energy" or electric-powered vehicles for another three years, in part to fight air pollution.

Under that program, Beijing now provides up to 60,000 yuan ($9,767) for the purchase of an all-electric battery car and up to 35,000 yuan for a "near all-electric" plug-in vehicle.

Last month, China also ordered government officials to use more electric and plug-in hybrid cars as part of its drive to cut pollution by putting 5 million such vehicles on the road by 2020.

President Xi Jinping has been urging government agencies to buy domestic brands, key ones among them being BYD Co Ltd and SAIC Motor Corp.

Major Chinese cities including Beijing, Shanghai and Tianjin this year opened their markets to electric car makers based in other cities, as China moves to stamp out protectionist barriers within the country.

(Reporting by Kazunori Takada, Norihiko Shirouzu and Shanghai newsroom; Editing by Clarence Fernandez)