Promoting Vehicle Upgrades Instead of Mandating Scrapping

Recently, the National Development and Reform Commission and the Ministry of Finance jointly released the "Notice on Implementing Large-Scale Equipment Upgrades and Consumer Goods Trade-In Policies in 2026," officially launching the highly anticipated vehicle trade-in policy (which encompasses both scrapping upgrades and replacement upgrades).

The policy outlines that in 2026, individual consumers who scrap gasoline-powered passenger vehicles registered before June 30, 2013, diesel and other fuel-powered passenger vehicles registered before June 30, 2015, or new energy passenger vehicles registered before December 31, 2019, and then purchase new energy passenger vehicles or fuel-powered passenger vehicles with a displacement of 2.0 liters or less, as listed in the Ministry of Industry and Information Technology's "Catalogue of New Energy Vehicle Models Eligible for Vehicle Purchase Tax Reduction or Exemption," will be eligible for a one-time subsidy.

From a straightforward reading of the policy, fuel vehicles must have been registered for 12 years to qualify for scrapping subsidies, while new energy vehicles only need 6 years, sparking discussions about their lifespans. However, the reality is that the 6-year threshold is a policy incentive aimed at encouraging the upgrade of early new energy vehicles, rather than an indication of their actual lifespan.

Technological Innovation Pace Sets the Trend

The differing periods for scrapping subsidies between fuel vehicles and new energy vehicles reflect various factors, including technological innovation patterns, characteristics of core components, and industrial development objectives.

In recent years, the fuel vehicle industry has entered a mature technological phase, characterized by slower updates and more localized optimizations in emissions and fuel consumption. In contrast, new energy vehicles are experiencing a rapid development phase, with battery performance and intelligence levels undergoing "quantum leaps."

Before 2019, mainstream new energy vehicle models on the market typically had NEDC ranges between 300-400 kilometers, with battery energy densities generally below 150Wh/kg. In the 2017 Ministry of Industry and Information Technology catalog, only three pure electric passenger vehicles had battery system energy densities exceeding 150Wh/kg.

In just a few years, by 2025, mainstream new energy vehicle models have seen their ranges increase to 500-700 kilometers, with some high-end models even surpassing 1000 kilometers, significantly alleviating concerns about range.

For new energy vehicles registered before the end of 2019, a 6-year age marks a significant performance gap. After prolonged use, battery degradation becomes pronounced, leading to a sharp decline in charging efficiency, a significant increase in daily charging frequency, and even greater winter range loss, severely impacting practical usability. More critically, the high cost of battery replacement makes replacing the entire vehicle far more cost-effective than replacing the battery.

The generational gap in intelligence is equally striking. In 2019, a new energy vehicle priced at 200,000 yuan only offered basic cruise control as its driver assistance feature; today, a 100,000 yuan new model commonly includes L2-level full-speed adaptive cruise control, lane centering, and other practical functions.

This "generational" technological leap directly results in 6-year-old new energy vehicles falling behind current entry-level models in terms of performance, safety, and user experience. It's no exaggeration to say that a 200,000 yuan new energy vehicle from six years ago may offer a worse experience than a 100,000 yuan model today.

In contrast, fuel vehicles have seen "linear and slow" technological progress over the past 12 years, coupled with a mature and comprehensive maintenance system. Even vehicles over a decade old can maintain stable usability with proper care.

Promoting Vehicle Upgrades Instead of Mandating Scrapping

It's important to note that this policy is about "promoting vehicle upgrades" rather than "mandating scrapping." The new energy vehicle industry is still in a period of rapid technological innovation, with short product update cycles being an objective reality. However, the decision to replace or upgrade a vehicle ultimately rests with the consumer.

Technological advancements are continuously improving the economic viability and lifespan of new energy vehicles. Geotab data shows that the average annual battery degradation rate of new energy vehicles has improved from 2.3% in 2019 to 1.8% in 2024. Meanwhile, the continuous decline in battery costs will enhance the cost-effectiveness of repairing older models. Data indicates that battery costs dropped from 1 yuan/Wh in 2022 to 0.4 yuan/Wh in 2025 and are expected to fall below 0.3 yuan/Wh by 2030.

The reduction in battery replacement costs directly extends the economic lifespan of new energy vehicles. With the gradual commercialization of new technologies like solid-state batteries, the lifespan of core components in new energy vehicles will see further improvements.

Faced with a rapidly evolving market environment, consumers need to view vehicle update cycles rationally. On one hand, the policy provides tangible subsidy benefits for users with vehicle replacement needs, especially owners of pre-2019 new energy models. Through trade-ins, they can upgrade to vehicles with longer ranges and higher intelligence levels while effectively reducing purchase costs. On the other hand, for users without immediate replacement plans, as long as their vehicles pass annual inspections and battery health remains within a reasonable range, they can continue to use them without any mandatory phase-out thresholds set by the policy. It is foreseeable that as the new energy vehicle industry gradually matures, the pace of technological innovation will slow down, the economic lifespan of vehicles will steadily increase, and consumers' driving experiences will become more stable.

In essence, including 6-year-old new energy vehicles and 12-year-old fuel vehicles in the same category for promoting upgrades is a precise policy response to technological innovation patterns, characteristics of core components, and industrial development objectives. The "generational" technological leap in new energy vehicles renders 6-year-old models less competitive in terms of performance, safety, and usage costs, while the "linear and slow evolution" of fuel vehicles allows 12-year-old models to retain stable usability. This differentiated subsidy design efficiently phases out technologically outdated and inefficient models while driving the automotive industry's transformation and upgrading and the realization of dual-carbon goals, striking a wise balance between market demand and national strategy.

Ministry of Commerce data shows that in 2025, driven by the strong pull of consumer goods trade-in policies, China's automotive consumer market and industrial upgrading achieved historic breakthroughs, with over 11.5 million vehicle trade-ins throughout the year, driving related commodity sales to exceed 2.6 trillion yuan.

Looking ahead, with the continuous maturation of battery technology and the improvement of power battery recycling systems, the economic lifespan of new energy vehicles will gradually extend, and the policy's encouraged scrapping age threshold will also be dynamically adjusted. For consumers, this policy serves as both a favorable window for vehicle upgrades and a visual reminder of the industry's technological innovation pace.