The Chinese government appears determined to electrify transportation, and it is putting money in place alongside its rhetoric.
To that end, the Chinese Ministry of Finance announced on Tuesday a pilot program in five cities to subsidize the purchase of electric and hybrid cars. It is unclear when the program will begin.
According to Xinhua, the official Chinese news agency, consumers in those urban areas will be able to get up to around $8,785 off the price of a battery car and about $7,320 off plug-in hybrids. The money will be paid directly to carmakers, which will reduce the vehicle price accordingly, the government said.
Nationwide, consumers will be able to access a much smaller subsidy of $439 if they buy fuel-efficient cars with engines under 1.6 liters.
Reuters reported that the government would subsidize the construction of charging stations and battery recovery networks in the five cities: Shanghai, Shenzhen, Hangzhou, Hefei and Changchun.
Directly subsidizing purchases could “jump start” the electric vehicle market in China, said Craig Giffi, an analyst at Deloitte.
“The Chinese government has clearly stated its commitment, and now it’s putting in place critical elements of policy to make it a reality,” said Mr. Giffi, who leads Deloitte’s automotive practice in the United States.
“The Chinese really want to stimulate their industry,” said Phil Gott, managing director of automotive science and technology at IHS Global Insights. “The government is very much pushing in that direction, but it will take a long time.”
Mr. Gott said that he wrote an IHS report indicating that, because of China’s reliance on polluting coal plants, a switch to electric cars could actually be worse for the environment than running gasoline or diesel vehicles.
“But even as I was writing that report,” Mr. Gott said, “I was seeing different announcements saying that this or that new Chinese power plant was nuclear. No country is in a perfect position with pollution-free electricity today, and you have to start somewhere.”
American electric car companies are seizing the Chinese opportunity. The Indiana-based lithium-ion battery maker Ener1 announced last week that it had signed a joint venture with the electric vehicle division of leading Chinese auto parts maker Wanxiang.
The new venture will supply batteries for the Chinese market, taking advantage of Wanxiang’s extensive customer list.
Charles Gassenheimer, chairman and chief executive of Ener1, predicted in an interview that China, already the largest auto market in the world, would also have the largest electric vehicle market by next year. “It’s exploding,” he said.
Coulomb Technologies, a charging station leader, has embryonic projects in China. According to its chief executive, Richard Lowenthal, “Subsidies like this are tremendously helpful in building E.V. volume sooner than it would happen by natural competitive forces.”
The subsidies will be reduced once 50,000 green cars are sold, the government said.
Sourced from www.wheels.blogs.nytimes.com