China’s push for cleaner vehicles just got a lot more serious. On October 9th, three key government bodies—the Ministry of Industry and Information Technology, the Ministry of Finance, and the State Taxation Administration—jointly released updated, tougher technical requirements for New Energy Vehicles (NEVs) to qualify for purchase tax exemptions in 2026 and 2027.
This announcement significantly raises the bar, especially for plug-in hybrids, and is poised to shake up the market.
The biggest headline from the new policy is the massive jump in the required electric-only range for plug-in hybrids.
– Old Requirement: 43 kilometers (km)
– New Requirement (2026): At least 100 km
Chinese media analysts estimate that roughly 40% of the PHEVs currently on the market have electric ranges below the new 100 km threshold.
PHEV Requirements Summary (2026-2027)
| Requirement | Detail |
| Electric Range | Increased from 43km to ≥ 100km |
| Fuel Consumption | <70% of standard limits (for vehicles under 2,510kg) |
| Fuel Consumption | <75% of standard limits (for vehicles ≥ 2,510kg) |
| Electric Energy Consumption | <140−145% of standard limits (depending on weight) |
Tighter Rules for Battery Electric Vehicles (BEVs)
Pure Electric Vehicles also face stricter scrutiny, focusing heavily on energy efficiency:
– Stricter Standard: Energy consumption must now comply with the new national standard, GB 36980.1-2025.
– The Crunch: This new standard is approximately 11% stricter than previous requirements.
– Heavy Vehicles: Larger passenger vehicles over 3,500kg will now be judged against the consumption standard set for 3,500kg vehicles.
Market Impact and the Coming Inventory Rush
Industry experts are predicting immediate market reactions, particularly in the lead-up to the January 1, 2026 implementation date:
– Inventory Clearance: Expect manufacturers to conduct aggressive, end-of-year sales to clear out existing inventory of soon-to-be non-compliant PHEV models.
– Luxury Survives: Many premium plug-in hybrids already exceed the 100km mark, making them safe bets. Models like the Aito M5 (230km range), BYD Tang DM-i (175km), and Li Auto L8 (≥ 225km) comfortably meet the new standard.
– Entry-Level Pressure: The new rule poses a significant challenge for some popular entry-level models, including specific variants of the BYD Qin Plus, Qin L, and Geely Galaxy A7, which may lose their valuable purchase tax exemption in 2026.
The new requirements officially take effect on January 1, 2026. Vehicles currently listed in the tax exemption catalogue that already meet the new technical rules will be automatically transferred to the 2026 catalogue. Any vehicles that fail to meet the new standards will be removed. For manufacturers aiming to get any non-compliant models on the first 2026 exemption catalogue, applications must be completed by December 12, 2025.
The new policy is a clear sign that China is accelerating its move toward higher-quality, more efficient NEVs, forcing automakers to innovate quickly to maintain market eligibility and competitive pricing.
[source: Car News China]
