The Ministry of Finance has decided to lighten taxes on vehicles, aiming to promote the use of new energy. The new tax cut is expected to save billions for the increasing number of electric car owners, The Paper reported

For energy-saving cars, the vehicle and vessel tax will be halved. For new energy vehicles, such tax is exempted.

New energy vehicles refers to pure electric commercial vehicles, plug-in hybrid electric cars and fuel cell commercial vehicles.

Zhang Xiang, an independent car analyst, said that the life cycle of a car is generally 8 to 10 years, so the tax reduction can help each car owner save several thousand yuan. Zhang also believes the new policy will stimulate the sales of new energy cars.

Based on the number of new energy vehicles and the development trend, the tax cut could reduce between one and 10 billion yuan for all car owners.

In the first half of 2018, China’s new energy vehicle production and sales were 413,000 and 412,000 respectively, up 94.9% and 111.5% from a year earlier.