China is facing growing pressure to fund road maintenance as buyers increasingly opt for larger and heavier electric vehicles (EVs), a trend that is reducing fuel tax revenue while increasing wear on road infrastructure, according to a Bloomberg report.
Data from the China Passenger Car Association (CPCA), cited by Bloomberg, showed that six out of every 10 new vehicle models launched in the first half of 2026 measured more than five metres in length, compared with a much smaller share of compact models. Vehicles measuring less than 4.5 metres accounted for only 2 per cent of new launches during the period, down from 13 per cent in the first half of 2025.
The shift towards larger vehicles has coincided with rising EV adoption. Electric vehicles accounted for 35.4 per cent of China’s new vehicle market in the first half of 2026, up from 30.1 per cent during the corresponding period last year, the report said.
According to Bloomberg, the growing EV fleet has contributed to a decline in fuel tax collections, widening the funding gap for road repairs and maintenance. Since EV owners do not pay fuel tax and also receive lower vehicle purchase tax than buyers of petrol and diesel vehicles, the shortfall in road funding has widened. China’s transport ministry had estimated the gap at around 300 billion yuan (about $61.7 billion) in 2023, and the report suggested the deficit has likely increased since then.
In response, the Chinese government has begun scaling back incentives for electric vehicles. It has reduced the purchase tax concession for EVs to 5 per cent, with a maximum benefit of 15,000 yuan, and announced the removal of annual tax exemptions for plug-in hybrid electric vehicles (PHEVs) and extended-range electric vehicles (EREVs).
The report said PHEVs and EREVs have contributed to the growing preference for larger and heavier vehicles. Examples include full-size sport utility vehicles and large dual-cab pickup trucks that exceed five metres in length and weigh significantly more than conventional passenger cars.
China has also introduced energy consumption standards that impose stricter requirements on heavier vehicles in an effort to discourage what state-run media described as a “dangerous weight arms race”.
Bloomberg noted that similar debates are emerging in Australia, where rising EV adoption has reduced fuel excise revenue and prompted discussions on introducing road-user charges to help fund road maintenance as the transition away from internal combustion engine vehicles gathers pace.
