Shares of U Power Limited (NASDAQ: UCAR) experienced a significant boost on Wednesday following an announcement from China. The country unveiled a new tax break package worth 520 billion yuan ($72.35 billion) aimed at promoting electric vehicles (EVs) and green energy vehicles. This move is expected to stimulate auto demand within China, according to Reuters.
Under the new policy, purchasers of new energy vehicles (NEVs), which include battery electric vehicles, plug-in petrol-electric hybrids, and hydrogen fuel-cell vehicles, will enjoy a purchase tax exemption of up to 30,000 yuan per vehicle. This exemption will be applicable to NEVs bought in the years 2024 and 2025.
These tax exemptions will continue until 2026 and 2027, albeit at reduced amounts. During those years, the total tax benefits will be halved.
This news has sparked a rally in various Chinese EV stocks, as the four-year extension of tax exemptions surpasses market expectations.