CHINA may be preparing to impose new taxes on new energy vehicles (NEVs) as policymakers grapple with the unintended consequences of the country’s rapid transition to electrified transportation. 

State media outlets and industry bodies have begun publicly questioning the long-standing tax advantages afforded to battery-electric (BEV) and plug-in electric vehicles (PHEVs), arguing that increasingly heavy NEVs are placing additional strain on the country’s 5.49-million-kilometre road network while contributing little towards their upkeep. 

NEVs now account for more than 60 per cent of new-car sales in China, a milestone achieved in large part through government support and exemptions from charges traditionally borne by owners of internal combustion vehicles. 

But as the market matures, those incentives are increasingly coming under scrutiny.

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The emerging debate comes at a time when China’s NEV market – encompassing BEV, PHEV, and range-extended vehicles (or REVs) – has shown signs of slowing following the introduction of a five per cent purchase tax in January.

It also marks a notable shift in tone from Beijing, which has spent more than a decade aggressively promoting electrification through subsidies, tax exemptions, and favourable policy settings. 

The catalyst for the latest debate is the growing weight of China’s new-generation EVs.

According to state-run news agency Xinhua, the average kerb weight of electric vehicles launched during the first four months of 2026 reached 1939kg, up 28 per cent from 2020.

Many of the latest flagship electric SUVs and people movers unveiled at the Beijing motor show in April exceeded 2800kg, with some tipping the scales at more than three tonnes.

Xinhua said a typical mid-sized electric sedan now weighs more than 2000kg (kerb), compared with around 1600kg for an equivalent petrol-powered model.

The increase has been attributed largely to the fitment of ever-larger battery packs in pursuit of longer driving ranges, as well as the addition of advanced driver assistance systems (ADAS) and increasingly sophisticated in-car technology.

Chinese state broadcaster China Central Television (CCTV) has also joined the criticism, arguing that larger and heavier EVs consume more resources during both manufacturing and operation.

“The heavier the vehicle, the more resources it consumes in production and operation,” the broadcaster said.

“Batteries with larger capacity require more rare mineral resources and generate more carbon emissions in the manufacturing process.”

The concerns extend beyond resource consumption and environmental impacts. 

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State media have also highlighted the growing imbalance in China’s road maintenance funding model.

Since 2009, China has incorporated road maintenance charges into fuel excise, with motorists effectively paying around 1440 yuan ($A300) per vehicle each year through petrol and diesel purchases.

Because BEV owners do not purchase conventional fuels, they make little or no contribution to road maintenance despite, in many cases, driving heavier vehicles. 

Guangming Daily, another state-run publication, argued in a recent editorial that it is “obviously inappropriate” for internal combustion vehicle owners to shoulder the full burden of road maintenance. 

“What urgently needs to be discussed now is how new-energy vehicles can be required to share and bear responsibility for road maintenance as soon as possible,” it said.

“Charges based on mileage are the most equitable approach.”

The China Passenger Car Association (CPCA) has gone further, proposing a digital taxation system based on vehicle mileage, kerb weight, and battery consumption.

The proposal has been echoed by the People’s Daily, the official newspaper of the Chinese Communist Party, which argued that the current fuel-tax system is no longer suitable for an era increasingly dominated by electrified vehicles.

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Industry observers believe the public debate is no coincidence.

John Zeng, director of Asia Forecasting at consultancy GlobalData, said Beijing was using state media to prepare the market for policy change. 

“Through state media, the government is signalling that the time has arrived to consider ending tax incentives for new-energy vehicles,” he said.

“The government won’t wait for long because the urgency is there.”

That urgency is being amplified by the rapid decline of China’s traditional vehicle market and the associated erosion of fuel tax revenues.

Through May, sales of new-energy vehicles fell by 15 per cent following the introduction of the purchase tax, while sales of traditional passenger vehicles slumped an even steeper 31 per cent.

The dual decline has dented what was once a reliable source of government revenue.

“The government faces an urgent need to recoup tax revenue from new-energy vehicles,” said Mr Zeng. 

Should Beijing move to introduce a mileage-based road user charge or weight tax, it could significantly alter the economics of NEV ownership in the world’s largest electric vehicle market.

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Such a move would also represent another sign that China’s EV industry is entering a new phase – one in which market maturity, infrastructure costs and fiscal realities begin to take precedence over the generous incentives that helped create the world’s most electrified automotive market. The impact in Australia…

AN EV road user charge has been on the agenda locally for some time.

The federal government has been pushing for a distance-based tax as fuel excise revenue comes under increasing pressure.

Canberra has called for a national road user charge for electric vehicles as a priority and is increasingly focused on replacing the fuel excise revenue – an income stream set to diminish as the number of new energy vehicles on Australian roads increases.

The issue has climbed to the top of the federal government’s transport taxation agenda in recent times, with treasury and state governments examining options ranging from a simple odometer-based levy (distance travelled method) to more sophisticated charging systems based on vehicle size and usage applications.

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At the heart of the debate is the growing imbalance between road funding and vehicle taxation.Unlike owners of petrol and diesel vehicles, NEV drivers contribute little or nothing to the fuel excise system that has traditionally funded Australia’s road network.

Fuel excise currently generates more than $15 billion annually for the federal government, a revenue stream expected to steadily erode as EV adoption accelerates.

Modelling by the Parliamentary Budget Office (PBO) suggests a national road user charge for NEVs, levied on a per-kilometre basis, could generate hundreds of millions of dollars in additional revenue.

The PBO has previously modelled a charge equivalent to the fuel excise paid by an average passenger vehicle, equating to around 4.8 cents per kilometre. 

The issue is complicated by constitutional and political challenges… 

Victoria’s pioneering EV road-user levy was struck down by the High Court in 2023, effectively confirming that any broad-based road user charge would need to be implemented at the federal level. 

Meanwhile, New South Wales still intends to introduce its own charge from July 2027, or when EVs account for 30 per cent of new vehicle sales, whichever occurs first. 

The debate now confronting policymakers is not whether NEV drivers should contribute towards road funding, but how and when such a system should be introduced without undermining the nation’s transition to low-emissions transport.

As Australia’s NEV fleet grows, the pressure to establish a fair and sustainable replacement for fuel excise is only set to intensify.