2027年起车船税改革将改变中国新能源车市场格局

Vehicle and vessel Tax Reform (from Jan. 1st2027) to Shift NEV Mix Towards Pure EVs Bin WangResearch Analyst+852-220-35496 China to Remove Tax Exemptions for Certain NEVs in 2027, Impacting PHEVOwners with New Annual Tax Burden Wei HuangResearch Associate+852-2203-7057 The Ministry of Finance (MoF), State Taxation Administration (STA), and Ministryof Industry and Information Technology (MIIT) have jointly announced a reformof vehicle and vessel tax, effective January 1, 2027, which will remove taxexemptionsfor plug-in hybrid electric vehicles(including range-extendedvehicles), pure electric commercial vehicles, and fuel cell commercial vehicles.Vehicle and vessel tax in China is an annual levy based on engine displacementfor passenger vehicles, with amounts ranging from RMB 60-360 for enginesbelow 1.0L, RMB 300-540 for 1.0L-1.6L, RMB 360-660 for 1.6L-2.0L, RMB 660-1200 for 2.0L-2.5L, RMB 1200-2400 for 2.5L-3.0L, RMB 2400-3600 for 3.0L-4.0L, and RMB 3600-5400 for those above 4.0L. Consequently, owners of mostplug-in hybrid electric vehicles, typically with engine sizes ranging from 1.5L-2.0L, will face an annual tax burden of RMB 300-660 starting in 2027. Vehicle Tax Reform to Shift NEV Mix Towards Pure EVs, Boosted by FastCharging Innovations While the announced RMB 300-660 annual tax burden for plug-in hybrid electricvehicles (PHEVs) is less than 1% of the average vehicle price, we anticipate thisreform will directionally trigger a shift in the mix between pure electric vehicles(PEVs) and PHEVs within the overall NEV demand. This trend is expected to befurther strengthened by advancements in fast-charging technology. For example,BYD’s "Flash Charging" technology dramatically reduces charging times, offeringan experience akin to refuelinga traditional gasoline vehicle; it can charge from10% to 70% in just five minutes and reach 97% in a total of nine minutes undernormal temperatures. Even in extreme low temperatures (-30°C), the battery cancharge from 20% to 97% in only 12 minutes. Suchfast-charging technologiescouldmeaningfully boost the market share of pure electric vehicles bysignificantly reducing range anxiety. Therefore, the aforementioned vehicle andvessel tax reform is seen as a negligible negative impact for PHEV makers andaslightly positive development for pure electric automakers like Tesla and NIO. China's NEV Policy Shifts from "Policy-Driven" to "Market-Driven" as TaxExemptions Fade We interpret this as a change in the central government's attitude towards thenew energy vehicle (NEV) industry. With NEVs now accounting for 63% ofdomestic new car sales in May 2026, tax exemptions had increasingly been perceived as an unfair tax treatment for the majority of the market. Consequently,the NEV sector's development is now expected to rely on technological innovationrather than continued government support in terms of tax reductions or cashsubsidies. Earlier this year, effective January 1st, 2026, the Chinese governmentbegan levying a 5% vehicle purchase tax on all NEV purchases, albeit with areduced maximum tax exemption of RMB 15,000 per vehicle. Looking ahead, theNEV vehicle purchase tax rate is slated to further increase to 10% from January1st, 2028. This series of changes signifies a clear policy shift for NEVs from a"policy-driven" to a "market-driven" mode. China May Introduce Battery-Based Consumption Tax on NEVs to AddressRoad Maintenance Funding Shortfall Looking ahead, we anticipate the Chinese government might introduce additionaltaxation for New Energy Vehicles (NEVs) as part of its efforts to increase fiscalincome. This expectation stems from the historical reliance of China's roadmaintenance fundingon transfer payments from the refined oil consumption tax.The rising NEV penetration has led to a continuous decline in refined oilconsumption, resulting in a significant shortfall in nationwide road maintenancefunding. Consequently, we believe the Chinese government might introduce abattery size-based consumption tax for NEVs in the future, serving as a transferpayment for NEV-related road maintenance funding, especially considering thatNEVs now constitute the majority of new car sales. Appendix 1 Important Disclosures Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from localexchanges via Reuters, Bloomberg and other vendors. Other information is sourced from Deutsche Bank, subjectcompanies, and other sources. Important Disclosures Required by U.S. Regulators 1-Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public offering for thiscompany, for which it received fees. 2-Deutsche Bank and/or its affiliate(s) may act as a market maker or liquidity provider in the financial instrumentsissued by this company. 7-Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investmentbanking or financial advisory services within the past ye