China to lift restrictions on purchase of new-energy vehicles

(ECNS) -- The State Council of China issued an action plan for energy conservation and carbon reduction during 2024-25, according to a circular released on Wednesday, which calls for gradually lifting restrictions on the purchase of new energy vehicles (NEVs) in cities.

Currently, several major cities including Beijing, Shanghai, Shenzhen, and Guangzhou have imposed purchasing restrictions for NEVs.

For example, in Shanghai and Shenzhen, car buyers must have paid social security for a specified number of years. In Beijing, buyers must acquire a license plate allocation for NEV through a queuing and lottery system.

On May 11, Shenzhen eased restrictions by removing the social security requirement.

According to a notice from the local Transportation Bureau, Shenzhen residents now only need a residence permit to apply for an indicators for new energy passenger vehicles.

Additionally, individuals who already own a vehicle with a Shenzhen license plate can now apply to purchase another hybrid passenger vehicle. Previously, consumers in Shenzhen needed to have paid social security in the city for more than 24 consecutive months to be eligible to purchase an NEV.

Easing car purchase restrictions has been frequently mentioned in Chinese policies in recent years.

According to news media The Paper, China Merchants Securities believes that the purpose of relaxing these restrictions is to fully unleash consumer potential and loosening purchase limitations is seen as a low-cost, quick-acting policy measure to stimulate the market.

Cui Dongshu, secretary-general of the China Passenger Car Association, also pointed out that lifting purchase restrictions can effectively promote consumer potential. This is particularly true for cities where restrictive policies have led to significantly lower car ownership. Cui has repeatedly called for completely lifting purchase restrictions in cities with car ownership below 4 million.

Gradually lifting restrictions on NEV purchases is expected to increase its penetration rate in the domestic market.

According to data from the China Passenger Car Association, retail sales of NEVs in April reached 674,000 units, a year-on-year increase of 28.3 percent, though a month-on-month decrease of 5.7 percent. The domestic retail penetration rate was 43.7 percent, up 11.7 percentage points from 32 percent in the same period last year.

The China Association of Automobile Manufacturers forecasts that total car sales in China will reach 31 million units in 2024, with NEV sales projected to hit 11.5 million units.

Industry expectations widely predict that China's NEV penetration rate will exceed 50 percent by 2025.