EVs Facing 'Fuel Tax': How Long Can New Energy Economics Hold Up?

An overlooked suspense is brewing in the auto industry: If every EV owner had to start bearing the 35% tax found in each liter of gasoline tomorrow, would NEV enthusiasts remain so steadfast?

Changan Auto Executive Vice President Yang Dayong threw out a bold yet realistic judgment at a media briefing: In the future landscape of Chinese cars, pure electric will occupy 65%, hybrids 35%. He simultaneously exposed an unspoken industry fact—fuel cars contain 35% tax per tank, while EVs are currently "tax-exempt," but "as EV share grows, bearing this social responsibility is sooner or later."

This sentence acted like a depth charge, blasting the NEV narrative from "environmental idealism" back to "cost reality." I dug through Changan's recent financial reports and public materials, trying to piece together the complete logic behind Yang Dayong's prediction.

Who Pays the 35% Tax?

Yang Dayong didn't give a timeline, but his words point to a clear endpoint: Once EV ownership breaks a certain critical point, the government will inevitably transfer costs like road construction, traffic management, and environmental governance to EV users. That critical point might be when pure electric penetration reaches 30% to 40%.

Let's do the math. Currently, China has about 340 million cars, with ~30 million NEVs, including ~20 million pure electrics. If we follow Yang Dayong's 65% pure electric target, future ownership would reach 220 million. Assuming 15,000 km/year driven, 0.15 kWh/km consumption, and 0.6 yuan/kWh electricity price, annual electricity cost is 1,350 yuan. In contrast, fuel cars cost ~0.6 yuan/km in gas, totaling 9,000 yuan/year, of which 3,150 yuan is tax. Meaning, once EVs start sharing the tax burden, each owner pays at least 2,000 to 3,000 yuan extra annually. This is conservative—if matching fuel car tax levels, extra annual costs could hit 5,000 yuan.

Yang Dayong's original quote: "A tank of fuel contains 35% tax; now these taxes aren't borne by EVs." This isn't a threat, it's a statement of fact. China's road maintenance funds have long relied on fuel taxes and tolls. In 2023, road maintenance spending was ~600 billion yuan, with fuel taxes contributing ~400 billion. If NEVs hit 40 million without paying tax, that money has to come from somewhere else.

This is the deep concern of traditional automakers like Changan. Unlike startups that can bet entirely on pure electric, they can't ignore policy shifts because once tax policies land, pure electric's cost advantage shrinks significantly, while hybrid models perfectly balance "saving on electricity" and "paying tax on oil." Yang Dayong's 35% hybrid share is essentially leaving a buffer zone for sudden policy changes.

65:35, Prophecy or Pie in the Sky?

I habitually "stress test" industry bigwigs' predictions. What's Yang Dayong's data source? In 2023, China's NEV penetration was ~31%, with pure electric ~22% and plug-in hybrid ~9%. To reach his stated 65% pure electric, even assuming an extremely optimistic NEV penetration rate (70% by 2030), pure electric would need to account for 90% of that. This ratio hasn't appeared in the past five years—even during the 2021 pure electric boom, pure electric made up ~80% of NEVs, while plug-in hybrids stayed above 20%.

More critically, Yang Dayong's "hybrid" likely includes Range Extenders (EREVs). Driven by brands like Li Auto and AITO, EREV sales surged over 170% YoY in 2023. EREVs can still use mostly electricity but enjoy green plates and purchase tax exemptions. If policies tighten, will EREVs be classified as hybrids due to the "presence of an engine"? Or as EVs due to "pure electric range >200km"? This gray-area policy game is what Yang Dayongs are truly calculating.

Changan's own product line layout exposes this hesitation. Deepal focuses on EREV and BEV, Avatr on BEV, but Qiyuan heavily deploys PHEVs. Walking on three legs is because no one knows which path tax policy will cut off.

[!note] In Q1 2024, Changan sold 128,000 NEVs, with 56,000 BEVs and 72,000 hybrids. Hybrids accounted for 56% of sales, far above the industry average. This might explain why Yang Dayong leaves room for 35% hybrids—Changan's hybrid inventory needs digesting.

Who Pays for Infrastructure?

Another avoided question: EVs don't pay fuel tax, but charging piles, grid expansion, and battery recycling require massive investment. These costs are currently subsidized by the state and grid, effectively paid by everyone. Once subsidies fade, a "transport service fee" might be embedded in every kWh. In 2023, some regions piloted charging service fee hikes; Shenzhen fast-charging stations saw fees jump from 0.3 yuan/kWh to 0.8 yuan/kWh, a 167% increase.

If a final transport tax of 0.5 yuan/kWh is added, pure electric usage cost rises from 0.09 yuan/km to 0.18 yuan/km, still much lower than fuel cars' 0.6 yuan/km. But note, there's also battery degradation cost—based on current lifespans, depreciation is ~0.2 yuan/km. Combined, it's 0.38 yuan/km, plus 2,000 yuan/year in taxes, roughly equal to hybrid highway fuel costs. Hybrids can use pure electric in cities, lowering comprehensive costs further. This is the logic behind Yang Dayong's 35% hybrid share: When subsidy bonuses dry up, hybrids might be the most rational choice.

Changan's booth is brightly lit, but the underlying tech route battle is far less glamorous than it appears. The ratio of pure electric to hybrid isn't decided by engineers, but by a document from the Ministry of Finance and State Taxation Administration.

When politicians' and engineers' blueprints collide with tax officials' abacuses, who compromises first? Or rather, are we ready to pay as much tax for a car without an exhaust pipe as we do for a fuel car?

Original Link: https://www.ithome.com/0/977/465.htm