A new vehicle purchase tax scheme has arrived. Will NIO-SW become the biggest winner? | Insight Research

In the domestic policy system promoting the development of new energy vehicles, the exemption of purchase tax for new energy vehicles is a very important part, especially after the complete withdrawal of subsidies for new energy vehicles, the exemption of purchase tax continues to play a role in widening the cost gap between new energy vehicles and fuel vehicles.

However, with the rapid development of the domestic new energy vehicle industry, both sales volume and technological level have greatly improved. The scope of the exemption of purchase tax for new energy vehicles has changed from almost comprehensive to only being open to high-quality and high-level new energy vehicle products.

Recently, the Ministry of Industry and Information Technology, the Ministry of Finance, and the State Administration of Taxation jointly issued the "Announcement on Adjusting the Technical Requirements for Tax Exemption of New Energy Vehicle Products for Vehicle Purchase Tax", which provides a six-month transition period from January 1, 2024 to May 31, 2024. After this transition period, stricter adjustments have been made to various standards such as the range of electric vehicles and plug-in hybrid vehicles, energy density, and energy consumption levels. The difficulty for new energy vehicles to obtain purchase tax exemptions has increased, except for battery-swapping vehicle models, which are not significantly affected and have become beneficiaries of this adjustment.

1. The difficulty of obtaining purchase tax exemptions for new energy vehicle products has increased across the board

Specifically, the threshold for new energy vehicle companies to obtain tax exemptions for new energy vehicles has been raised.

(1) Pure electric vehicle models

The standards for pure electric vehicle models mainly focus on three aspects: range, energy density, and power consumption:

1. The range standard for new energy passenger vehicles has been raised from >100km to >200km, with an increase of up to 100%.

This poses a significant challenge for most small and micro electric vehicles that have a high cost-performance advantage. Taking the popular Wuling Hongguang Mini EV as an example, its range is only between 120km and 170km. If there is no improvement in range after June next year, it will no longer be eligible for the purchase tax exemption.

1. The energy density of new energy passenger vehicles, buses, and trucks has been raised from the previous 95Wh/kg, 95Wh/kg, and 95Wh/kg to 125Wh/kg, 135Wh/kg, and 125Wh/kg, respectively, with increases of 31.6%, 42%, and 31.6%.

The increase in energy density does not have a significant overall impact on new energy trucks and buses. Since the previous new energy vehicle subsidies already had high requirements for energy density, new energy buses and trucks that want to receive subsidies have consciously increased their energy density. Currently, the mainstream new energy trucks and buses have energy densities above 140Wh/kg, fully meeting the requirements.

Only small and micro electric vehicles in the new energy passenger vehicle category are slightly affected. Taking the Wuling Hongguang Mini EV as an example again, its energy density is 110Wh/kg, slightly lower but can still meet the standard with some enhancement.

1. The power consumption per 100 kilometers for new energy passenger vehicles, buses, and trucks has all decreased to varying degrees, but the overall magnitude is not significant. They can basically meet the requirements and should not become the criteria that hinder the eligibility for purchase tax exemptions.（2）Plug-in hybrid and extended-range models

There were no standard improvements for plug-in hybrid buses and trucks, mainly focusing on improving fuel efficiency. There are still no requirements for non-diesel plug-in hybrid buses and trucks, and the fuel efficiency and fuel consumption of diesel models only need to be greater than 40% and lower than the extreme value, with no significant changes.

Only plug-in hybrid passenger cars have specific standard improvements. In terms of fuel consumption in battery maintenance mode, the previous 70% has been reduced to 60% (for vehicles with a curb weight less than 2510kg) and 65% (for vehicles with a curb weight greater than 2510kg). The fuel consumption in battery depletion mode has been reduced from the previous 135% to 125% (for vehicles with a curb weight less than 2510kg) and 130% (for vehicles with a curb weight greater than 2510kg).

The continuous reduction in fuel consumption indicators is not only for plug-in hybrid models, but also a problem that fuel vehicles have been facing. It is a problem that needs to be addressed. Therefore, although the energy consumption requirements for plug-in hybrid models have been increased, it is completely within expectations. Relevant car companies can adjust parameters through upgrades in the later stage to meet the requirements.

2. Battery swapping models become the biggest beneficiaries

In this round of policy upgrades for new energy vehicle purchase tax exemptions, only battery swapping models are not significantly affected and have instead become beneficiaries.

For relevant car companies with battery swapping models, they only need to meet the above-mentioned standards and provide proof of providing battery swapping services to upload the battery swapping mode label. For car companies that build their own battery swapping stations, they need to provide design drawings of the stations and proof of ownership. For those who entrust battery swapping services, they need to provide materials such as vehicle models, proof of station matching, and cooperation agreements.

This is also why leading battery swapping station company NIO has frequently announced cooperation matters since the fourth quarter of this year. New energy vehicle companies such as Changan and Geely have also chosen to join the battery swapping camp and form a strong alliance with NIO to develop battery swapping networks and research battery swapping models.

Many new energy vehicle companies are choosing to explore the battery swapping field at this time, partly because the advantages of separating the vehicle and the battery in new energy vehicles are more prominent.

In this round of policy upgrades for new energy vehicle purchase tax exemptions, it is explicitly stated that battery swapping models will issue separate invoices for the power battery and the vehicle body. The power battery is completely exempt from purchase tax, and the purchase tax is only levied on the vehicle body. This provides significant support for the tax exemption amounts of 30,000 yuan and 15,000 yuan per vehicle set for the years 2024-2025 and 2026-2027, respectively.

This means that the tax exemption thresholds for new energy vehicles in the years 2024-2025 and 2026-2027 are 339,000 yuan and 169,500 yuan, respectively, and the excess amount will be subject to a 10% vehicle purchase tax.

Taking NIO as an example, which was the first to introduce the concept of separating the vehicle and the battery with its BASS (Battery as a Service) program, although most of NIO's vehicle models are priced above 339,000 yuan, they can bypass this restriction by utilizing the vehicle and battery separation. For example, NIO's current main model, the ET5 Travel Edition (100KWh), has a retail price of 356,000 yuan, but the purchase cost under the BASS program is only 228,000 yuan, a significant reduction of 128,000 yuan, or a decrease of 36%.Even with the subsequent restriction of 169,500 yuan, it is not ruled out that NIO will continue to meet the requirements by reducing the price of its products or lowering the vehicle price and increasing the battery leasing fee.

In conclusion, the exemption of new energy vehicle purchase tax will no longer be universally applicable in the future, but will gradually be limited to high-quality and high-level new energy vehicle products. This new policy provides obvious advantages for models that adopt the battery swapping mode, which may make battery swapping models more competitive and attractive in the future new energy vehicle market. Battery swapping models are also expected to achieve the same industry status as mainstream and charging models.