Huayuan Securities: Purchase tax subsidies will be halved in 2026, and tram sales are expected to maintain medium to high single-digit growth

The Zhitong Finance App learned that Huayuan Securities released a research report saying that from 2024 to the end of 2025, new energy vehicles will continue to be exempt from vehicle purchase tax, but the tax exemption amount for each new energy passenger vehicle will not exceed 30,000 yuan. Meanwhile, vehicle purchase tax will be halved for new energy vehicles from 2026 to 2027, and the tax reduction amount for each new energy passenger vehicle will not exceed 15,000 yuan. Although the current NEV penetration rate has exceeded 50%, considering the launch of high-quality supply+the gradual decline in new energy channels, and manufacturers/dealers may bear some of the declining subsidies, it is expected that the NEV penetration rate will maintain a small single-digit percentage point increase in 2026 under the decline in purchase tax subsidies, which could potentially exceed expectations or see the iterative progress of smart driving.

The main views of Huayuan Securities are as follows:

In 2026, the NEV purchase tax subsidy will be cut in half, and the technical requirements for the subsidy will also be further increased

Since August 1, 2014, the state has announced several times to propose or continue the vehicle purchase tax exemption policy for new energy vehicles. Among them, from September 1, 2014 to the end of 2023, new energy vehicles are exempt from vehicle purchase tax and there are no tax exemptions. From 2024 to the end of 2025, new energy vehicles will continue to be exempt from vehicle purchase tax, but the tax exemption for each new energy passenger vehicle will not exceed 30,000 yuan. Meanwhile, vehicle purchase tax will be halved for new energy vehicles from 2026 to 2027, and the tax reduction amount for each new energy passenger vehicle will not exceed 15,000 yuan.

While the amount of the purchase tax subsidy is gradually being limited, the technical requirements for the vehicle itself, such as battery life, fuel consumption, and electricity consumption, are also on the rise. Take the pure electric range of a plug-in mixed/extended-range passenger car as an example. The pure electric range requirement will increase from no less than 43 km (2021 to 2025) to no less than 100 km (2026-2027).

The decline in the new energy purchase tax subsidy policy from 2026 to 2027 may show three major characteristics: a wide area of impact, a large impact, and a more significant impact on low-cost vehicles

Wide area of impact: It is expected that 90% of NEV consumers will be significantly affected by the purchase tax subsidy halving policy. From 2026 to 2027, for models with a sales price of 300,000 or less (the amount of insurance accounts for about 10%/90% of the total new energy, respectively), the ratio of additional purchase tax amounts to less than 5% and 5% of the sales price, respectively. Therefore, it is expected that 90% of consumers with low price models will feel the decline in subsidies quite clearly, and the decline in subsidies will more definitely affect total demand next year.

Significant impact: For more than 95% of new energy consumers, subsidies are expected to decline to the highest level in history in 2026. 1) Judging from the absolute amount and share of the decline in subsidies, for models with sales prices below 450,000 yuan (the upside risk accounts for about 95% of total new energy), the degree of decline from 2026 to 2027 may be the highest in history. In comparison, next year's decline in subsidies will have a relatively small marginal impact on high-priced models. 2) In terms of technical indicators, the increase in technical requirements for PHEV/EREV pure electric range is the highest in history.

From a structural point of view, the pure electric range requirements for plug-in hybrid/extended range vehicles have increased, and it is expected that some low-priced models with new energy will no longer be able to enjoy subsidies. The pure electric range requirement for plug-in and extended-range passenger cars receiving purchase tax relief in 2026-2027 is increased by more than 100%. At a static level, it is estimated that about 40% of plug-in hybrid and extended range passenger cars will no longer be able to enjoy the subsidy. In particular, it may affect 70,000 to 200,000 yuan compact and mid-size plug-in hybrid models represented by economical plug-in hybrid models such as BYD, but the impact on extended-range models is small (Note: This is only a static calculation. In fact, OEMs generally launch modified models every year, and the range or mileage of the models will increase, so the actual affected cars will increase. The type ratio is expected to be lower than the predicted value).

Sales volume in the new energy passenger vehicle industry is related to multiple factors, and subsidies are only one of them

Although the current NEV penetration rate has exceeded 50%, considering the launch of high-quality supply+the gradual decline in new energy channels, and manufacturers/dealers may bear some of the declining subsidies, it is expected that the NEV penetration rate will maintain a small single-digit percentage point increase in 2026 under the decline in purchase tax subsidies, which could potentially exceed expectations or see the iterative progress of smart driving.

Reviewing past NEV subsidy policies, the decline in subsidies alone will have a negative impact on passenger car sales, but model sales after the decline in subsidies are also related to the share of NEV subsidies in model sales prices, the extent of the decline in subsidies, and whether manufacturers/dealers bear the declining subsidies and extent; and whether the industry has more high-quality supply, and whether there is still much room for improvement in the industry's overall NEV penetration rate will also affect sales in the NEV passenger vehicle industry.

Looking ahead to the total amount of new energy in 2026, considering that the penetration rate of NEVs is currently at a high level (50% +), and the supply of existing models in the market is already relatively abundant. Therefore, although the 2025H2+ 2026 industry expects at least 40 new NEVs to be launched, the demand for quality created by high-quality supply will increase or decline.

However, considering 1) under the NEV knockout competition, manufacturers/distributors may bear some of the declining subsidies, manufacturers may also avoid direct consumer comparison of purchase tax amounts before and after the downturn through face-offs, and 2) the gradual decline in new energy channels, it is expected that the NEV penetration rate will continue to increase slightly in 2026. According to comprehensive estimates, the insurance volume of new energy passenger vehicles is expected to reach 12.83 million units in 2025, +19% year over year; in 2026, the year-on-year growth rate of NEV passenger vehicle insurance may be 9%, with EV/PHEV/EREV growth rates of about 5%/11%/28%, respectively. The potential improvement point for the total volume in 2026 may be whether autonomous driving technology such as VLA can exceed expectations, thereby creating additional demand through technological innovation.

Investment advice

In anticipation of a slight increase in NEV sales, the industry still has structural opportunities to maintain the automobile industry's “optimistic” rating. It is recommended to focus on the following main lines: 1) High-end car companies less affected by the decline in NEV purchase tax subsidies: it is recommended to focus on JAC (600418.SH); 2) the strong new car cycle is expected to better hedge against the impact of declining subsidies: it is recommended to focus on Geely (00175), SAIC Motor Group (600104.SH), BAIC Blue Valley (600733.SH), Zero Sports Auto (09863), etc.; 3) Expected to pass autonomous driving, etc. Car companies that create additional demand through technological innovation: it is recommended to focus on Ideal Automobile-W (02015) and Xiaopeng Motor-W (09868).

Risk Alerts

Automobile policies fall short of expectations, macroeconomic development falls short of expectations, few new product launches that exceed expectations, etc.