Export Tax Rebate Rate Drops from 13% to 9%, Chinese Automakers Need to Recalculate Profit Margins Going Overseas

The export tax rebate rate for new energy vehicles drops from 13% to 9%, Chinese automakers need to recalculate the profits going overseas.

On October 12, the Ministry of Finance and the State Taxation Administration announced that starting from April 1, 2027, the VAT export rebate rate for new energy vehicles will be reduced from 13% to 9%. Superficially, this is just 4 percentage points, but for domestic automakers striving to go global, this could be a profit account that must be recalculated.

Why specifically now? Because exports have gradually transformed from incremental business into a crucial pillar supporting sales. According to CPCA data, from January to September 2026, new energy passenger vehicle exports from domestic markets reached 3.887 million vehicles, a year-on-year increase of 138.8%. September alone saw exports of 558,000 vehicles, a 163.5% increase year-on-year.

Domestic market pressure, overseas sales high-speed growth. On one hand, going overseas becomes more important; on the other, export tax incentives are tightening. The signal sent by the policy is clear: competition in automotive exports cannot rely forever on low prices and policy space.

01 Four Percentage Points, How Much Profit Is Actually Lost

First, a potentially confusing concept needs correction. 13% down to 9% refers to China's VAT export rebate rate, not a 4% tariff surcharge on Chinese cars added overseas, nor paying 4% tax on the retail price per car sold. According to current export tax rules, production enterprises usually apply the 'exempt, credit, and rebate' method. The difference where the rebate rate is lower than the VAT applicable rate results in a portion that cannot be exempted or deducted, ultimately accounted for in export costs.

Let's use an understandable assumption. A car company exports one new energy vehicle overseas. The FOB price used for tax calculation is 150,000 Yuan, applicable VAT rate is 13%, no special deductions like bonded materials. After the rebate rate drops from 13% to 9%, estimated under general 'exempt, credit, and rebate' terms, the new non-deductible cost corresponding to this car is approximately 6,000 Yuan.

If the profit margin in the original export link was only 10,000 Yuan, with other conditions unchanged, the book value might drop to only 4,000 Yuan. Profits decrease by 60%, far from the casual description of 'down 4%'.

But 6,000 Yuan cannot be regarded as a fixed loss for all car models. The actual amount depends on the export FOB price, whether the operating entity is a production enterprise or a foreign trade enterprise, imported bonded materials, input tax vouchers, and specific tax calculation methods. Results can vary significantly between different models and companies.

What is certain is that under the same transaction price and cost structure, a reduction in the rebate rate will squeeze the profitability of the domestic export link. Who ultimately bears the cost depends on subsequent negotiations.

02 Overseas Selling Prices May Not Rise Accordingly

The most intuitive reaction is to pass on the new costs to overseas consumers. However, going overseas for car companies is not just converting domestic guidance prices with exchange rates. From the domestic factory to the overseas user's hand, there is ocean freight, insurance, import duties, certification, channel sharing, marketing, after-sales service, and local VAT. Changes in export rebates act on the Chinese export link. Overseas terminal transaction prices are determined by the entire value chain and market competition. The two are not a simple 4% against 4%.

Taking the 150,000 Yuan FOB price car from just now as an example again. If the new tax cost is assumed to be 6,000 Yuan, and the overseas landing transaction price converts to 300,000 Yuan, 6,000 Yuan is only equivalent to 2% of the terminal price. But even with only 2%, car companies dare not raise prices easily. Local consumers might be comparing BYD, Hyundai, Volkswagen, and Tesla. If the same class products offer better financial plans or promotional discounts, buyers might turn away completely.

A more realistic situation is cost sharing. Stronger brands and supply-tight models can attempt to moderately raise wholesale prices. For highly competitive models, manufacturers might first absorb part of the cost themselves, then renegotiate rebates and marketing budgets with importers and dealers. Some low-profit orders might simply not be accepted.

What the policy truly changes is not necessarily all overseas prices rising in sync, but rather the price floors of different models and dealer negotiation capabilities.

03 Who Is More Injured? Cannot Just Look at Group Gross Margin

For models with high gross margins and brand premiums, losing 4 percentage points in rebate is certainly uncomfortable, but not necessarily crippling. For models relying on extreme low prices to fight the market, this cut might hit the thinnest profit margin. Assuming two car companies export at the same FOB price, one originally has 12% profit space, the other only 4%. Under the simplified condition of no price increase and unchanged costs, the latter's operational impact is significantly larger.

Here we cannot directly rank based on group gross margins published by car companies. Financial report gross margins mix domestic sales, overseas sales, different models, parts, and other businesses, and cannot replace single-car export profits. True pressure distribution depends on the company's overseas sales structure, regional pricing power, supply chain costs, and export transaction chains.

BYD, Geely, SAIC, and Chery are all going overseas, but brand positioning, exported models, and localization progress are not the same. Within the same group, high-profit models and low-profit volume models may be affected completely differently.

Another easily overlooked target: foreign brands produced and exported in China. This policy targets export commodities meeting conditions and their tax treatment, not inherently targeting only domestic brands. Models produced and exported in Shanghai also need to judge applicable policies based on the actual export entity, commodity codes, and tax regulations.

This is not a simple 'Chinese Brand vs Overseas Brand' competition, but a change in cost structure of the Chinese manufacturing export link.

04 Europe's Trouble: Multiple Cost Overlaps

If Southeast Asia and Latin American markets mostly test price and channels, the situation in Europe is much more complex. The EU has already implemented countervailing duties on some purely electric passenger cars originating from China. EU final ruling states that the corporate tax rates corresponding to BYD, Geely, and SAIC are 17.0%, 18.8%, and 35.3% respectively, in addition to general import duties and other market costs. Note that countervailing duties and China's export rebates are two different policies, not simply added directly on the overseas retail price.

So for a company exporting complete vehicles from China to Europe, pressure does not appear alone. Export rebate space shrinking, import trade barriers, exchange rate and ocean freight cost changes, plus local brand price competition in Europe. Any item could affect final profits.

More critically, overseas markets usually do not allow guideline price adjustments as easily as domestic ones. Contract cycles, dealer inventory, model certification, and product launch rhythms all make price adjustments lag.

However, this does not mean Chinese car companies in Europe can only raise prices or exit. Models with high brand recognition may continue to hold selling prices with product power; enterprises with lower cost structures still have room for cost reduction; enterprises that have advanced overseas production have another choice.

This round of adjustment may accelerate car companies evaluating the economic account of complete vehicle exports vs overseas production. But relying solely on rebate changes, one cannot judge if a certain enterprise will definitely move production lines abroad.

05 Watershed: Export or Overseas Manufacturing

BYD has been increasing overseas factories in recent years to shorten delivery cycles, get closer to consumers, adapt to tariffs and rules of origin, and build local supply chains. BYD's 2025 annual report disclosed that the Brazil passenger car factory achieved its first car off the line, the Thailand factory continues production, and overseas manufacturing layouts like Hungary are also progressing.

After the export rebate policy adjustment, the strategic value of this global manufacturing system will only be recalculated. However, overseas production is not a magic card that can immediately offset 4 percentage points. Factory construction, labor, energy, local supplier cultivation, production ramp-up, and quality control all require spending.

If it's just exporting parts made in China for overseas assembly, it involves tax on the parts themselves, local rules, and origin certification. For models with limited annual sales, moving factories overseas might be more expensive than losing part of the rebate.

Clearer division of labor may appear in future overseas expansion. Markets with large scale and stable sales prioritize local manufacturing; new markets still verifying demand continue to test the waters with complete vehicle exports; orders with too thin profits and heavy after-sales investment raise quotes or actively give up. This is both a recalculation triggered by tax changes and a lesson Chinese car companies must learn moving from 'selling cars out' to 'long-term operations locally'.

Tech Jungle Commentary

In the view of Tech Jungle, the real impact of this export rebate drop from 13% to 9% is not 'Chinese EVs globally raising prices by 4%', nor 'car company profits immediately dropping by 4%'. It is more like pulling out a cushion originally used to buffer low-price competition from the industry chain, causing some problems masked by sales growth to resurface. What determines pricing? How much profit is made in each market? After export scale expansion, do profits grow in sync?

From the policy trail, photovoltaic, battery, and other products have already experienced export rebate adjustments. New energy vehicles now enter this sequence. After industrial development reaches a certain scale, policy focus is shifting from encouraging products to be sold out quickly to testing real competitiveness and sustainable operational capabilities. This is an industry judgment based on policy trends, not equivalent to official announcement to restrict new energy vehicle exports, nor can export rebate reduction be directly interpreted as an exchange condition for European trade negotiations.

Profits will be under pressure, overseas pricing may undergo adjustments, but in the end, it will absolutely not be a uniform result for all car companies. Enterprises that can build brand premiums, control costs, grasp overseas channels, and promote reasonable localization layouts still have ways to digest it. Enterprises relying on a few thousand yuan of profit to grab orders and with thin dealer networks may not be so composed.

The easiest thing for Chinese cars going overseas to present in the past was 'how many cars were sold'. Starting from 2027, another question will become more important: how much money did these cars actually make?