Incentives to buy

The central government has also taken strong financial measures to boost the sector's development.

In June, the State Council announced the extension of tax breaks on new energy vehicle purchases until the end of 2027.

NEVs bought in 2024 and 2025 will be exempted from purchase tax, with a ceiling of 30,000 yuan ($4,175) per passenger vehicle.

The purchase tax on NEVs purchased in 2026 and 2027 will be halved, which means each passenger vehicle purchase is eligible for a tax exemption of up to 15,000 yuan.

The measures equate to 520 billion yuan in tax exemptions and reductions, said Xu Hongcai, vice-minister of finance, at a news conference in June.

Cui, from the China Passenger Car Association, said the stimuli show the importance the central government attaches to the booming NEV sector.

He added that the four-year extension of the tax exemptions to the end of 2027 will enable carmakers to better plan production and sales targets.

The China Passenger Car Association estimates that sales of passenger NEVs are expected to reach 8.5 million units this year, accounting for 36 percent of total vehicle sales in the country. It also predicts the NEV market will continue its growth momentum in 2024.

China's NEV industry has been developing at a fast speed. In early July, the 20 millionth new energy vehicle rolled off the production line in Guangzhou, Guangdong province.

With this landmark, the sector has entered a new stage of large-scale, globalized and high-quality development, and is becoming an important part of China's modern industrial system, said Fu Bingfeng, executive vice-president and secretary-general of the China Association of Automobile Manufacturers.

In the first five months of this year, Chinese carmakers produced over 3 million units and sold 2.94 million NEVs, up 45.1 percent and 46.8 percent year-on-year, according to the China Association of Automobile Manufacturers.

It estimates sales of NEVs will reach at least 9 million units this year, up from 6.88 million units in 2022.

At the event celebrating the 20 millionth NEV rolling off the assembly, Xin, the vice-minister of industry and information technology, said, "The NEV is the main direction of the transformation, upgrading and green development of the global automobile industry, and is also the strategic choice for the high-quality development of China's automotive industry."