File Photo/Zhang Jian (NBD)

Apr. 1 (NBD) -- China will extend the purchase subsidies and acquisition tax exemption for new energy vehicles (NEV) by 2 years, as one of a series of economic stimulus passed on the State Council's executive meeting on Tuesday.

The subsidies policies for NEV were previously scheduled to expire at the end of 2020, after the subsidy scale more than halved since June 2019.

Stock of U.S electric vehicle maker Tesla, for which China is the second biggest market, rose by 4.36 percent Tuesday. Stock of its Chinese counterpart NIO was up 2.58 percent.

The extension could help secure the goal of 1.6 million NEV sales in 2020, which would be about 30 percent year-over-year growth, predicted Cui Dongshu, secretary-general of passenger car association CPCA.

Cui also remarked that the measure will help lower the heavy cost burdens on domestic NEV manufacturers, and encourage other automakers to shift to new energy.

According to data from the CPCA, wholesale volume of new energy passenger cars in China in February plummeted by 77.7 percent year over year, following a 51.3 percent y-o-y decline in January. The COVID-19 pandemic and the subsidy cut were cited as major factors for the fall.

Other auto industry policies passed on Tuesday included rewards for the phasing out of diesel trucks with older emission standards in key regions, and the cut of value-added taxes for used car transactions.

The automobile sector may be the first choice for stabilizing domestic demand amid the COVID-19 outbreak, Ping An Securities said on Tuesday in a report, predicting that stimulus policies could narrow auto sales decline in 2020 by 5-9 percentage points from the projected 12 percent.

Email: gaohan@nbd.com.cn