Fuel vehicles and electric vehicles set off a decisive battle： many people call for an extension of the exemption from the purchase tax for new energy vehicles

On April 1, the China Electric Vehicle 100 Forum (2023) was held in Beijing.

As an annual industry event for the new energy automobile industry, this forum brought together guests from various fields such as automobiles, energy, transportation, cities, and communications to discuss in depth the development situation of the global automobile industry, the high-quality development path of new energy vehicles, the development strategy of China’s intelligent connected vehicles, the development trend of the core industrial chain supply chain such as power batteries, the trend of new generation automobile consumption change, the coordinated development strategy of automobiles and energy, and the new transportation energy security system.

Compared with the 100 Forum in previous years, this year’s forum, the guests paid more attention to the topics of new energy vehicle infrastructure building, autonomous driving commercialization landing, and vehicle-road collaboration.

At the same time, many attendees also called for the extension of the new energy vehicle purchase tax exemption policy to stabilize the high-quality development of the industry.

Fuel vehicles and electric vehicles set off a decisive battle

In the past few years, the new energy automobile industry has rapidly heated up and become an important bright color in the process of high-quality development of the automobile industry. The gradual increase in the market penetration rate of new energy vehicles has also brought a significant impact to the traditional fuel vehicle industry.

Recently, influenced by multiple factors, there has been a price chaos in the automotive market, with most fuel vehicle companies cutting prices at an unprecedented rate, causing heated discussions on the whole network.

At the China Electric Vehicle 100 Forum (2023), Ouyang Minggao, vice chairperson of the China Electric Vehicle 100 and an academician of the Chinese Academy of Sciences, made a judgment on the current industrial landscape.

He said that the current new energy vehicle market is fully squeezing the fuel vehicle market, and the entire fuel vehicle industry chain is under pressure. The competition between the two has kicked off a decisive battle.

Ouyang Minggao believes that the current new energy vehicle industry is characterized by "rapid growth and lack of profit", while fuel vehicles are "lack of growth and profit". Although the cost of new energy vehicles is still higher than that of fuel vehicles, the brand, influence and premium of new energy vehicles are rising, and the premium of joint venture fuel vehicles is declining. High-quality new energy vehicles can compete with the price of joint venture fuel vehicles.

"The camp of new energy vehicles continues to expand, and you are chasing after me. The competition has entered the stage of positional warfare, and the market has entered the stage of survival," Ouyang Minggao said.

Faced with the close competition between gasoline vehicles and electric vehicles, Mary Warlick, deputy director of the International Energy Agency (IEA), judged that by the mid-2020s, electric vehicles will achieve cost parity with traditional gasoline vehicles.

At the same time, the development of new energy vehicles has also brought a linkage effect to various related industries. Zou Ji, CEO of Energy Foundation (China) and President of China, believes that full electrification is an inevitable choice for high-quality development, pollution reduction and carbon reduction.

"According to the very conservative development goal of electric vehicles, by 2030 our country’s oil dependence is more than 70%, of which 13% can be replaced by electric vehicles. But according to the rapid development of these two years, it may far exceed this proportion. According to the oil price of 110 US dollars/barrel, at least 50 billion US dollars of imported oil expenditure should be saved a year." Zou Ji judged that promoting the full electrification of the automobile industry is not only good for traffic emission reduction and energy security, but also has great economic benefits.

The full marketization of new energy vehicles still faces challenges

Despite the significant growth rate and promising prospects, the current new energy vehicle industry still faces many challenges.

Wan Gang, chairperson of the China Association for Science and Technology, concluded that the comprehensive market-oriented development of domestic new energy vehicles faces the following challenges:

First, the development of comprehensive marketization is uneven and inadequate, and product performance and quality are still difficult to meet consumers’ needs for all-weather and all-scenario use.

Second, the progress of new energy commercial vehicles is slow and the market penetration rate is low.

Third, compared with the rapidly growing market demand for new energy vehicles, the infrastructure building of charging, hydrogen refueling networks, and vehicle-road coordination is still relatively lagging behind.

The fourth is the bottleneck of industrial development, including high prices of basic resources, poor supply chains, and some technical constraints.

Fifth, the bottleneck of industrial technology constraints. Including power battery upgrades, vehicle-grade chip shortcomings, power electronics architecture reconstruction, intelligent operating system research and development, as well as low-carbon development planning, carbon footprint research shortages and other issues.

Therefore, at this forum, Wan Gang suggested that the environmental adaptability, safety, and economy of pure electric vehicles should be continuously improved; basic research such as all-solid-state batteries and new system batteries should be continuously promoted; charging efficiency should be improved to further meet the needs of the whole climate and all scenarios in the market.

Xin Guobin, a member of the Party Group and Vice Minister of the Ministry of Industry and Information Technology, analyzed the changing trend of the new energy automobile industry pattern from an international perspective.

He believes that in the international situation, the rise of anti-globalization and trade protectionism has threatened the stability of the automobile industry chain and supply chain, affecting international exchanges and cooperation. At the same time, domestic automobile consumption has been relatively sluggish this year, and the pressure on the stable operation of the industry has increased.

"The automotive industry has typical international characteristics, and new energy vehicles need cross-regional and cross-industry collaboration. We will continue to adhere to the principles of openness, cooperation and win-win, and create a market-oriented, rule-of-law and international business environment. Strengthen exchanges and cooperation with other countries in the fields of new energy vehicle technology innovation, trade and investment, standards and regulations, and contribute positive forces to the modernization of China’s automotive industry and inject new impetus into the recovery of the world economy," Xin Guobin said.

Focusing on the future of industrial development, Chen Qingquan, an honorary professor at the University of Hong Kong and an academician of the Chinese Academy of Engineering, believes that in the second half of the automotive revolution centered on intelligence, special attention should be paid to automotive chips and operating systems.

"The software and hardware systems involved in the future car are not covered by one industry, and should be integrated across borders." Chen Qingquan believes that the second half of the automotive revolution is intelligent, networked and shared, and its main core technologies are automotive chips and operating systems.

Call for Extension of New Energy Vehicle Purchase Tax Exemption

After recognizing the many challenges facing the development of the new energy vehicle industry, a number of industry players called for an extension of the new energy vehicle purchase tax exemption policy at this forum.

Among them, Meng Xia, CEO of Volkswagen passenger car brand China and head of group sales of Volkswagen Group (China), said that despite the short-term slowdown in market demand, Volkswagen is confident in the continued recovery of China’s auto market. In order to promote the sustainable and healthy development of the industry, it is called for extending the purchase tax exemption period for new energy vehicles beyond 2023 and formulating a relatively stable policy framework.

It is reported that at the press conference on the theme of the "Authoritative Department’s Opening" series held by the State Council Information Office on March 1, Vice Minister of Finance Xu Hongcai once again mentioned that new energy vehicles purchased in 2023 will continue to be exempt from vehicle purchase tax.

But in fact, automakers’ calls for continued policy support go beyond that.

Wang Chuanfu, chairperson of BYD, said at the China Electric Vehicle (2023) 100 Forum that the automobile market is changing every day, but the trend of electrification will not be reversed. At present, the timetable for the full electrification of automobiles in our country has been advanced and the process is accelerating. In order to accelerate the modernization of the automobile industry, it is hoped that the purchase tax reduction policy for new energy vehicles will be extended until 2025.