China’s 2026 NEV Standard Explained: No Tax Break for Hybrids with EV Range Under 100km

With both “incentives” and “pressures” placed before automakers, they only have 3 months to make adjustments—from the release of the new requirements to their implementation. What choices will automakers make?

The new energy vehicle (NEV) purchase tax exemption policy, which has been extended four times, is about to draw to a close.

From January 1, 2026, to December 31, 2027 (inclusive), the purchase tax preference for NEVs bought within these two years will be adjusted to a 50% reduction, with the maximum tax reduction per vehicle further lowered to RMB 15,000 ($2,107).

Moreover, shortly after the conclusion of the National Day Golden Week, the Ministry of Industry and Information Technology, the Ministry of Finance, and the State Taxation Administration jointly released the Announcement on Technical Requirements for New Energy Vehicles Eligible for Vehicle Purchase Tax Reduction or Exemption (2026–2027) today. This announcement sets forth new technical requirements for NEVs applying for purchase tax reduction or exemption between 2026 and 2027.

In other words, not every NEV will be eligible for the 50% purchase tax reduction.

We have prepared a simplified interpretation of the new regulations from the Ministry of Industry and Information Technology for you.

1. Technical Standards for Battery Electric Vehicles (BEVs)

For passenger BEVs with a curb weight not exceeding 3,500 kg, their 100km electricity consumption level shall be evaluated in accordance with Limits for Energy Consumption of Electric Vehicles – Part 1: Passenger Vehicles.

Based on the vehicle’s curb weight, this standard classifies BEVs with fewer than three rows of seats and non-all-wheel drive (non-AWD) into three categories, and calculates the “qualified threshold” for their 100km electricity consumption.

Translating the above standard (originally presented in a graph) into more accessible language:

• Curb weight ≤ 1,090 kg: Qualified threshold for electricity consumption = 10.1 kWh/100km
• 1,090 kg < Curb weight ≤ 2,710 kg: Qualified threshold for electricity consumption = 0.00556 × (Curb weight – 1,780) + 13.92
• Curb weight > 2,710 kg: Qualified threshold for electricity consumption = 19.1 kWh/100km

For AWD models, the qualified threshold shall be further multiplied by 1.03. For high-performance models with a peak power-to-weight ratio ≥ 250 kW/t and a 0–100 km/h acceleration time ≤ 3 seconds, the threshold shall be multiplied by 1.20.

Take the recently launched Li Auto i6 as an example: the rear-wheel drive (RWD) version of the Li Auto i6 has a curb weight of 2,515 kg. Its corresponding qualified threshold for electricity consumption is calculated as 0.00556 × (2,515 – 1,780) + 13.92 = 18.0 kWh/100km. According to Li Auto’s official data, the vehicle’s comprehensive electricity consumption under the CLTC cycle is 13.6 kWh/100km.

As for the “passenger vehicles with a maximum designed gross mass exceeding 3,500 kg” mentioned in the announcement, their qualified threshold for electricity consumption shall comply with the standard for vehicles with a curb weight over 3,500 kg specified in Qualified Thresholds for Energy Consumption of Electric Vehicles – Part 1: Passenger Vehicles, i.e., a unified threshold of 19.1 kWh/100km.

2. Technical Standards for Plug-in Hybrid Electric Vehicles (PHEVs)

In comparison, the requirements for PHEVs are more complex.

First and most notably, the announcement stipulates that the minimum conditional equivalent all-electric range (AEV) of PHEVs under the WLTC test cycle will be raised from the previous 43 km to 100 km. Enterprises are often more sensitive to policy trends than ordinary consumers, which may explain why many extended-range electric vehicles (EREVs) have adopted large-capacity batteries this year.

At the same time, the new requirements have relaxed the qualified thresholds for energy consumption of PHEVs:

• For PHEVs with a curb weight ≤ 2,510 kg: The qualified threshold for fuel consumption in charge-sustaining (CS) mode has been increased from 60% to 70% of the value specified in the Limits for Fuel Consumption of Passenger Vehicles. For those with a curb weight > 2,510 kg, the threshold has been raised from 65% to 75%.
• Similarly, for PHEVs with a curb weight ≤ 2,510 kg: The qualified threshold for electricity consumption in charge-depleting (CD) mode has been increased from 125% to 140% of the value specified in Limits for Energy Consumption of Electric Vehicles – Part 1: Passenger Vehicles. For those with a curb weight > 2,510 kg, the threshold has been raised from 130% to 145%.

Similar to the classification of BEV energy consumption thresholds, PHEVs are divided into three categories based on their curb weight (≤ 1,090 kg; 1,090 kg < curb weight ≤ 2,510 kg; > 2,510 kg) to set the qualified thresholds for fuel consumption per 100km in CS mode.

For the qualified threshold of 100km electricity consumption in CD mode, PHEVs are granted a higher threshold based on the standards for BEVs – this adjustment provides PHEVs with more flexibility in terms of both fuel and electricity consumption.

3. Simplified Summary of Eligibility

The calculation methods may seem complicated. Beyond explaining the principles, we have summarized three key points to help you understand at a glance:

• BEVs are divided into three categories based on curb weight, with a corresponding qualified electricity consumption threshold for each category. A BEV will be ineligible for tax reduction if it fails to meet the threshold of its respective category.
• The primary prerequisite for PHEVs/EREVs to qualify for tax reduction is having an all-electric range of 100 km or more.
• On the premise that a PHEV/EREV meets the 100km all-electric range requirement, its eligibility for tax reduction will be further determined by its fuel consumption in CS mode and electricity consumption in CD mode, which are categorized by three curb weight tiers.

Based on the above requirements, starting from January 1, 2026, eligible NEV models will be able to enjoy a maximum purchase tax reduction of RMB 15,000 ($2,107). Ineligible models will be excluded from the list of purchase tax reduction/exemption, sending a clear signal of “survival of the fittest” in the NEV market.

With both “incentives” and “pressures” placed before automakers, they only have 3 months to make adjustments—from the release of the new requirements to their implementation. What choices will automakers make? Will they rush to launch new models to align with the policy changes in 2026? Or will they first cover the purchase tax themselves to secure orders, and then make adjustments afterward?

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