China’s Green Push: Shanghai 2025 Vehicle Replacement and New Energy

Under the nation’s strong push for green and low-carbon development, Shanghai is promoting EV adoption through vehicle renewal subsidies and free NEV license plates, accelerating the transition from fuel cars to EVs.

I. Shanghai Vehicle Replacement Policies

In terms of green initiatives for the replacement of old fuel vehicles, in February several Shanghai Municipal Commissions and Bureaus issued the Notice No. 20 [2025] “Implementation Rules for the National Vehicle Scrapping and Renewal Subsidy Policy for 2025”, taking effect upon issuance and valid until 31 March 2026.

The Rules provide for a one-time fixed subsidy for all eligible individual consumers who, between 1 January and 31 December 2025, decide to scrap gasoline passenger vehicles or new energy passenger vehicles (electric vehicles but registered before 31 December 2018) to buy new energy passenger vehicles listed in a specific Catalog issued by the Ministry of Industry and Information Technology. The consumers will also be able to purchase fuel passenger vehicles with set limitations on the engine displacement. The subsidy will be equal to Rmb 20.000 for the purchase of new energy vehicles, Rmb 15.000 for the purchase of fuel vehicles that are complaint with the limitations imposed.

II. Shanghai New Energy Vehicle License Plate Policies

• Shanghai Green License Plate – Exclusive for Pure Electric Vehicles and Fuel Cell Vehicles

According to the “2025 Shanghai Measures to Encourage the Purchase and Use of NEVs”, especially for non-local residents holding a Shanghai Residence Permit, they now only need to have paid social security or personal income tax for 36 months (previously 48 months) to qualify for a free green (NEV) license plate. For applying organizations, they need to have more than five employees enrolled in Shanghai’s social security system or have continuously paid taxes in Shanghai for at least one year before applying. From the application to the final license plate issuance, the process usually takes about half a month.

• Shanghai Blue License Plate – Auction for Traditional Fuel Vehicles

Individuals with Shanghai household registration or non-local residents holding a Shanghai Residence Permit who have continuously paid social security or personal income tax for the past six months, as well as legally registered companies, can apply for the auction of Shanghai blue license plates through online or offline channels by completing the required procedures, including bidding registration and deposit payment. Recent data shows that the average winning bid for an individual blue license plate is approximately Rmb 93,600, while for organizations, it ranges from Rmb 120,000 to Rmb 160,000. The entire process, from the application to the final license plate issuance, may take 2 to 6 months to complete.

III. Green and Blue License Plates Outside Shanghai

Outside Shanghai, big cities like Beijing, Guangzhou and Shenzhen present a similar scenario in terms of waiting time to obtain a NEV green license plate, with an estimate time of around 1-2 weeks. As for the requirements, the key difference is the existence of a quota system, whose process is however more streamlined compared to the quota system for blue plates. Traditional fuel vehicle blue plates in these three cities are managed through a lottery system or a hybrid system of auctions and lotteries. In the capital city, the chances of obtaining the plate are quite low, 0.2% in 2023, and the waiting period can be of several years. As for the hybrid system in Guangzhou and Shenzhen, the average auction price is in the range of Rmb 30,000 to Rmb 50,000, with a waiting period varying from a few months to over a year.

In China, certain cities may impose temporary or permanent limitations for vehicles with non-local license plates. For example, in order to reduce traffic and pollution, in Shanghai drivers with plates issued in other cities are restricted from using specific elevated roads during peak hours, and an additional fee must be paid to use certain expressways. However, looking at a broader perspective, there are not significant restrictions in the country for driving with a non-local car plate.