Automobile Companies Launch Year-End Sales Push

With multiple policies nearing their end, purchasing new energy vehicles (NEVs) may soon become costlier.

Currently, more than 20 cities across the country have either suspended or adjusted their subsidy applications for trading in old vehicles for new ones. For instance, in mid-November, Hubei Province revised the distribution method for qualification vouchers for trading in old cars for new ones. It consolidated the daily distribution of these vouchers into four batches, with the last batch distributed on December 5th. Each batch of vouchers remains available until fully claimed. Similarly, Zaozhuang in Shandong Province has implemented a quota-based application management system for subsidy funds, distributing subsidy qualifications daily at 10 AM from December 1st to December 10th, until the quota is exhausted.

More critically, the full exemption from purchase tax for NEVs is set to expire in less than a month. According to the 2023 Announcement on Continuing and Optimizing the Policy for Reducing or Exempting Vehicle Purchase Tax for New Energy Vehicles, jointly issued by the Ministry of Finance, the State Taxation Administration, and the Ministry of Industry and Information Technology, from January 1, 2026, to December 31, 2027, NEVs will be subject to a 50% reduction in vehicle purchase tax, with a maximum reduction of 15,000 yuan per NEV passenger vehicle. This marks the official commencement of the final countdown for the purchase tax exemption policy for NEVs, which has been in effect since September 2014 and has undergone multiple extensions.

The approaching policy deadline has sparked enthusiasm in the automotive market, with nearly 20 mainstream automobile companies launching purchase tax guarantee plans. The core commitment of these plans is delivery assurance: for orders locked in before November 30th, if cross-year delivery occurs due to reasons attributable to the automobile company, the additional purchase tax costs incurred will be fully borne by the company, thereby alleviating consumers' concerns about purchasing vehicles.

Image source: @Xiaomi Automobile

Entering December, this wave of policy guarantees has intensified. Brands such as Xiaomi, Fangchengbao, and Changan Qiyuan have successively announced extensions to their subsidy policies, prolonging the original deadline for cross-year purchase tax guarantees from November 30th to the end of December, providing potential car buyers at the year's end with more time to make decisions.

The concentrated rollback of multiple policy incentives implies a structural increase in the comprehensive costs for consumers purchasing NEVs in 2026. However, industry insiders maintain a rational outlook, noting that the current domestic automotive market competition has entered a fierce stage. The expiration of old policies does not mean the complete end of incentives. As the market environment changes, automobile companies are likely to introduce new terminal promotion strategies and product incentive plans to maintain market competitiveness.

Behind the 'Guarantee' from Nearly 20 Automobile Companies

With the policy of halving the vehicle purchase tax for NEVs set to take effect on January 1, 2026, coupled with the gradual tightening of replacement subsidies in some regions, the NEV market is entering a critical window period for policy incentive transitions. Automobile companies are launching year-end 'sales battles' in succession to lock in users.

On December 1st, Xiaomi Automobile's official Weibo account stated that if orders are modified or locked in before 24:00 on December 26, 2025, vehicles are expected to be delivered before the end of 2025. If, due to Xiaomi Automobile's reasons, invoicing and delivery need to be completed in 2026, cross-year purchase tax subsidies will be available.

On November 29th, Changan Qiyuan announced the launch of a new Q05 'Super Car Buying Season' campaign: a flat-rate reduction of 5,000 yuan for unconditional trade-ins/additional purchases across the entire lineup, along with the continuation of the purchase tax guarantee policy until December 31st. It also promised to implement a more favorable subsidy or refund policy for users who had placed large deposits, locked in orders, or taken delivery before 24:00 on November 29th, in accordance with the new benefits of the 'Super Car Buying Season' campaign, with any differences being refunded.

MG has also introduced an extended policy for purchase tax guarantees for the new MG4. To avoid a reduction in purchase tax incentives due to cross-year delivery, MG decided to extend the purchase tax guarantee subsidy policy from November 30th to December 28th.

Prior to this, over 20 mainstream automobile companies, including Li Auto, NIO, Chery, AITO, Xiaomi, Changan, and GAC, have successively rolled out purchase tax 'guarantee' plans. The core terms of these policies are highly similar: most require consumers to lock in their orders before November 30th. If, due to non-user reasons such as production and transportation by the automobile company, the vehicle is invoiced and delivered in 2026, the automobile company will bear the purchase tax difference in forms such as final payment reductions, with a maximum subsidy of 15,000 yuan per vehicle.

In fact, the delivery cycles for many models currently extend even up to several months. For instance, the delivery cycle for the Li Auto i6 is 16-19 weeks, and for the Xiaomi SU7 PRO, it is 42-45 weeks. Cui Dongshu, Secretary-General of the China Passenger Car Association, stated that influenced by policy adjustments, consumers feel a stronger sense of urgency to purchase vehicles at the end of the year and thus consider delivery progress more when choosing models. The guarantee policies offered by automobile companies help alleviate consumers' doubts.

In addition to purchase tax guarantees, some automobile companies have also introduced December car buying benefits. Tesla is a typical example. On November 27th, Tesla China announced December car buying benefits covering all models, including the Model 3, Model Y, and Model Y L. Consumers who place orders before December 31, 2025 (inclusive), can enjoy a five-year zero-interest financing plan, an 8,000 yuan allowance for car paint customization, and special charging benefits. Those who take delivery of the Model 3 before December 31 (inclusive) can also enjoy an additional 8,000 yuan insurance subsidy.

'With the policy node of halving the purchase tax subsidy for NEVs, numerous automobile companies are engaged in their final battles, exerting their utmost efforts to accelerate new product development and seize this wave of policy incentives,' said Shao Mingfeng, CBO of VOYAH and General Manager of the Sales Company.

'The rollback of the purchase tax policy is expected to drive market performance in the fourth quarter, with a possible 'year-end rally' in December, which is a normal market reaction during the policy transition period,' said Lang Xuehong, Deputy Secretary-General of the China Automobile Dealers Association.

However, amidst the good news of order growth, automobile companies are facing dual pressures of production capacity bottlenecks and rising costs. Influenced by the surge in terminal orders and the contraction of upstream supply, the prices of raw materials for lithium-ion batteries have recently rebounded sharply. Data from the Shanghai Nonferrous Metals Market shows that the average price of lithium hexafluorophosphate reached 122,000 yuan per ton in mid-November, more than doubling from 60,000 yuan per ton in early October; the price of lithium carbonate has also increased by about 20% cumulatively. Li Liangbin, Chairman of Ganfeng Lithium, predicted that the global demand for lithium carbonate is expected to grow by 30%-40% in 2026, reaching 1.9 million tons, while supply increases can only match 25% of the demand growth. If demand exceeds expectations, lithium prices are likely to break through 150,000 yuan per ton and even challenge the 200,000 yuan per ton mark.

The transmission of cost pressures varies among automobile companies of different scales. Li Bin, CEO of NIO, stated that since models under the group can adopt a battery leasing model, battery costs are not included in the taxable base, and thus the impact of the purchase tax incentive rollback on the company is relatively small. However, for small and medium-sized automobile companies, they not only have to bear a maximum purchase tax guarantee subsidy of 15,000 yuan per vehicle but also cope with raw material price increases, severely compressing their survival space. Industry insiders estimate that for an NEV priced at 300,000 yuan, the 15,000 yuan subsidy will directly erode about 50% of the profit per vehicle, and some lesser-known brands have already suspended promotions due to their inability to bear the subsidies.

Industry profitability data also confirms this pressure. According to data disclosed by Cui Dongshu, in October 2025, the automotive industry's sales profit margin was 3.9%, down 0.5 percentage points from September and reaching the lowest level for the same period in five years. From January to October 2025, the automotive industry's sales profit margin was 4.4%, better than in 2024 but still at the second-lowest historical level.

From 'Policy-Driven' to 'Market-Driven'

Trading in old vehicles for new ones has been a core strategy for activating consumer potential in the automotive industry this year. To further boost consumption and stabilize the overall macroeconomic situation, the central government issued a total of 300 billion yuan in ultra-long-term special treasury bonds this year, with one of the core uses being to support consumer goods trading in old for new, which has become a tangible 'national subsidy' benefit for the people. The trading in of old vehicles and the renewal and scrapping of vehicles in the automotive sector are among the supported areas of these national subsidies. Data from the Ministry of Commerce shows that in the first 11 months of this year, consumer goods trading in old for new has driven sales of related goods exceeding 2.5 trillion yuan, benefiting over 3.6 billion person-times. Among them, over 11.2 million vehicles have been traded in for new ones.

It is noteworthy that alongside the trading in old vehicles for new ones policy, there is also a graded adjustment to the policy of reducing and exempting purchase tax for NEVs. In the view of industry experts, this graded rollback of the purchase tax policy is not a simple policy 'retreat' but rather signifies that China's NEV industry is transitioning from a policy-supported growth phase to a phase of large-scale, high-quality development.

The underlying changes in policy orientation are reflected in the raising of technological thresholds. The Ministry of Industry and Information Technology and two other departments jointly issued the Announcement on the Technical Requirements for NEV Products Eligible for Vehicle Purchase Tax Reduction or Exemption from 2026 to 2027, specifying that from 2026, the pure electric driving range of plug-in hybrid passenger vehicles (including extended-range hybrid vehicles) should be no less than 100 kilometers, a significant increase from the current requirement of 43 kilometers. In addition, the new regulations also impose higher requirements on indicators such as the curb weight and energy consumption of the entire vehicle. According to industry analysis, about 30% of plug-in hybrid models may enter a phase of production suspension and inventory clearance due to their inability to meet the new regulations.

Image source: Li Auto

Many automobile companies have made relatively adequate preparations for the policy changes. Ma Donghui, President of Li Auto, stated at the Q3 earnings call that the purchase tax policy rollback may lead to a 'year-end rally' effect where users concentrate on locking in incentives at the end of 2025, potentially causing a year-on-year decline in sales in the first quarter of 2026. However, he also emphasized that he remains optimistic about the increase in the penetration rate of NEVs in the long term, predicting that it will reach 55%-60% domestically in 2026. This judgment is shared by most automobile companies – the short-term order-grabbing is to smoothly navigate the policy transition period, while the core of long-term competition still lies in the construction of core capabilities such as battery technology upgrades and intelligent experience optimization.

Data from the China Association of Automobile Manufacturers shows that from January to October 2025, China's automobile production and sales reached 27.692 million and 27.687 million vehicles, respectively, with year-on-year growth exceeding 10% for both. Among them, the production and sales of NEVs reached 13.015 million and 12.943 million vehicles, respectively, with year-on-year growth of 33.1% and 32.7%. Chen Shihua, Deputy Secretary-General of the China Association of Automobile Manufacturers, introduced that since 2025, NEVs have continued to achieve relatively high growth. On the one hand, the domestic car trading in old for new subsidy policies have continued to be effective, with strong incentives and a wide coverage, driving relatively high growth in the NEV market. On the other hand, the halving of the purchase tax for NEVs in 2026 has led some consumers to purchase vehicles in advance, ushering in a new round of consumption peaks in the NEV market.

"As 2026 marks the inaugural year of the '15th Five-Year Plan,' boosting consumption will persist as one of our primary objectives," remarked Chen Shihua. Concurrently, he emphasized, "Given that the purchase tax for new energy vehicles is set to be reduced by half next year, it is advisable to persist in refining and enforcing automotive policies in the coming year. Moreover, releasing the implementation details at the earliest opportunity is crucial to stabilize market expectations and foster the seamless functioning of the industry."