The tax exemption was originally set to end on December 31, but the Chinese finance ministry has extended it until December 31, 2020 for buyers of plug-in petrol-electric hybrid, electric and fuel-cell vehicles – grouped under the "new-energy vehicle" (NEV) banner in the policy.
Earlier this year, the nation – which continues to exert its influence over the automotive landscape – announced aggressive NEV sales quotas for manufacturers.
The credit-based system will see the equivalent of 10 per cent of all vehicles sold need to be 'new-energy' by 2019, rising to 12 per cent in 2020.
Manufacturers expressed concerns about being able to meet the targets, which are actually more generous than those initially laid out by the Chinese government, when they were announced in September.
Earlier this year Xin Guobin, vice minister of industry and technology in China, told Xinhua about plans to ban all internal combustion vehicles, although no firm date has been announced.
There are also plans to have electrified vehicles account for 20 per cent of all vehicles sold in China by 2025.