The Chinese government will reduce the VAT rebate for exported electric and plug-in hybrid vehicles, including buses and trucks, from 13 percent to 9 percent. This policy change is scheduled to take effect on April 1, 2027.
Economists suggest this adjustment aims to limit aggressive price competition in international markets. The goal is to shift the focus of manufacturers toward technology, brand quality, and service rather than relying on state-subsidized pricing.
Analysts at Deutsche Bank project that the net profit for BYD will decline by approximately ¥5 000 per exported vehicle beginning in the second quarter of 2027. Other major manufacturers, including Chery, Geely, SAIC, and Xpeng, will also face this financial adjustment.
This measure follows a broader trend of phasing out state subsidies for mature industries in China. VAT rebates for solar module exports were eliminated in April 2026, and battery rebates are scheduled for complete removal by early 2027.
The policy shift occurs as Chinese automakers face a domestic market decline, with sales falling by 9.4 percent in September. Meanwhile, exports of battery and plug-in hybrid vehicles reached over four million units in the first nine months of 2026.
