China will cut export tax rebates for electric vehicles and plug-in hybrids from 13% to 9% in April 2027 to curb excessive industry competition and encourage consolidation amid weakening domestic sales and rising exports.
China’s Ministry of Finance and State Taxation Administration announced on 13 October 2026 that the country will reduce export tax rebates for new energy vehicles. The rebate will drop to 9% from the current 13%, effective from April 2027. The change applies to both battery electric vehicles and plug-in hybrids.
The rebate reduction aims to control excessive competition within the industry and push companies toward consolidation. Chinese automakers have been racing to capture overseas markets after domestic sales weakened. In September 2026, passenger car retail sales fell 28.0% compared to the same month last year, dropping to 1.62 million units.
Chinese automakers turned to international markets to offset declining home sales. New energy vehicle exports more than doubled in September 2026, while total passenger car exports climbed 74% to 917,000 units for that month. This shift to exports became a lifeline for companies facing slim profit margins at home.
The lower rebate rate will force automakers to make difficult choices. They can either absorb the additional costs or raise prices for overseas buyers. Most companies are expected to compress profit margins rather than increase prices, given fierce market competition. This squeezes returns for manufacturers already struggling with thin margins across their portfolios.
