China will extend a tax rebate on purchase of new-energy vehicles (NEV) until the end of 2020, in a continuation of policy support for the shift away from the internal combustion engine.
The Ministry of Finance said in a statement on Wednesday the the tax exemption, which was set to expire at the end of this year, will now run until December 31, 2020 for electric, plug-in petrol-electric hybrid and fuel-cell powered vehicles.
The extension comes as automakers in China prepare to meet strict NEV quotas from 2019 that have already produced a number of electric car deals and launches of electric and hybrid models.
Overseas auto makers have called on China to maintain financial support for the market, citing concerns that consumer demand is not sufficient to drive sales without State-backed incentive schemes.
The finance ministry said the extension would "increase support for innovation and development in new-energy vehicles," an area where China is hoping to catch up - and even overtake - more established global rivals.
Local firms like NEV specialist BYD are now jostling with global names such as Ford and Nissan in the race to develop new vehicles specifically for the Chinese market.
Growth of China's auto market, the world's largest, has slowed sharply this year, but new-energy vehicles have been a bright spot.
NEV sales in January-November period jumped 51.4 percent and are on track to hit the target of 700,000 NEV sales this year.
