China is updating its subsidy rules for vehicles with alternative drivetrains, introducing stricter efficiency and range requirements from Jan. 1, 2026. Only models meeting higher standards for pure electric range and energy consumption will qualify for tax incentives.
New Energy Vehicles (NEVs), including battery-electric vehicles, range-extender EVs, fuel-cell vehicles, and plug-in hybrids, now account for nearly half of all new car sales in China. In August 2025, electrified models represented 48.8 per cent of the market, setting a new record.
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Under the revised rules, plug-in hybrids will face the most significant changes. Previously eligible with an electric range of more than 43 kilometres, these vehicles must now offer more than 100 kilometres of pure electric range to continue receiving subsidies. Analysts estimate that around 40 per cent of currently available plug-in hybrid models will no longer qualify, mainly affecting entry-level vehicles, which may see price reductions later this year.
Efficiency requirements are also being tightened. Fuel consumption for plug-in hybrids must not exceed 70 per cent of the standard limit for conventional vehicles, rising to 75 per cent for models over 2,510 kilograms. Electricity consumption limits have been introduced, with hybrids allowed to exceed the pure electric standard by no more than 40 to 45 per cent depending on vehicle weight.
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Battery-electric vehicles (BEVs) are subject to a new national efficiency standard that is 11 per cent stricter than the previous benchmark. The prior exemption for vehicles over 3.5 tonnes has been removed, meaning all BEVs will now need to comply with the updated rules to maintain eligibility for tax incentives.
The new measures are intended to encourage manufacturers to improve drivetrain efficiency and support the government’s broader climate and electrification goals.
Source: carnewschina.com
