EV Shares Jump as China Considers Extending Tax Exemptions

June 23, 2022 7:54 AM EDT

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Singapore-traded shares of Nio Inc. (NYSE: NIO) gained 4%, Li Auto (NASDAQ: LI) traded up as much as 8.7% in Hong Kong, Xpeng Inc. (NYSE: XPEV) added 6.2% and BYD Co. gained 2.5% after Chinese state television station, Broadcaster CCTV reported Wednesday that the government may extend tax exemptions on electric-car purchases.

The State Council discussed a package of measures worth 200 billion yuan ($29.8 billion).

The government subsidies were introduced in 2009 to help the EV industry but are already being withdrawn and are due to be phased out completely next year. An exemption on the 10% EV-purchase tax is set to expire at the end of 2022.

Auto sales in China slowed down as the country battled Covid-19. Passenger vehicle sales slid 17% in May from a year earlier. Not a single new car was sold in Shanghai in April.

The aim of the extended tax exemption would be “to support the consumption of new energy vehicles”, CCTV said in its report.

“Consumption is the main driving force of the economy, and it is an important driving force for the [economy] to return to the right track,” CCTV quoted the State Council, adding that it vowed to “unleash the potential of automobile consumption”.

By Michael Elkins

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