BEIJING/SHANGHAI Passenger vehicle sales in China rose 7.3% in May compared with a month earlier, industry data showed on Thursday, as the government extended tax incentives to shore up demand amid a flagging economic recovery. Sales totalled 1.76 million vehicles in May, said the China Passenger Car Association (CPCA). For January-May, sales were up 4% versus the same period a year prior at 7.74 million cars. Sales of new energy vehicles (NEVs), which include battery-powered cars and plug-in petrol-electric hybrids, rose 10.5% in May from April and accounted for 32.9% of total May sales, CPCA data showed.

Tesla sold 77,695 China-made vehicles in May. The industry body didn't offer a breakdown of exports data by auto brands. A downtrend in NEV prices due to discounting and tumbling battery costs has yet to be reversed by Tesla's shift toward raising prices in countries including China. Nonetheless, NEV sales that typify big-ticket spending have mirrored a tepid rebound in consumption after China abruptly ended COVID-19 containment measures late last year. A weak recovery in auto sales has weighed on profitability. Some suppliers to state-owned Chongqing Changan Automobile Co Ltd have protested a payment cut by the automaker, saying they were being forced to pay for the drop in prices, Reuters reported. The government plans to extend and optimise tax incentives for NEV purchases and study policies to promote NEV development, state media reported on Friday, citing cabinet discussions. The foundation of economic recovery is not yet solid, state media reported, citing the discussions. In mid-May, the National Development and Reform Commission and National Energy Administration announced guidelines to accelerate the construction of charging facilities for electric vehicles to boost rural NEV purchases.

(Reporting by Qiaoyi Li, Zhang Yan and Brenda Goh; Editing by Christopher Cushing and Peter Graff)