China to Best U.S. in EVs, but Not Hybrids

China is likely to become the world’s largest market for plug-in electric vehicles thanks to a larger relative government investment, but will trail the U.S. in hybrid sales.

The Chinese government announced it will spend $14.7 billion through 2020 on alternative drivetrain vehicles, with the bulk of the money going towards all-electric vehicles, according to news reports quoted by’s Green Car Advisor.

That’s a greater outlay in consumer subsidies, industry incentives and spending on charging infrastructure than in the U.S., which (for now) boasts a much larger economy. The Chinese government would like 5 million alternative fuel vehicles to be on its roads by 2020.

The U.S. government has committed more than $2.5 billion in incentives for battery makers, consumer purchases, and for charging infrastructure, but won’t come close to the Chinese commitment in the coming years. Not all of that money is bearing fruit. The DOE gave A123 Systems a $249 million grant last year to manufacture lithium ion batteries in Michigan, ostensibly for electric vehicles under contract to Chrysler. Last week A123 Systems ended its work with Chrysler and is now focusing more on batteries that provide energy storage for the grid.

Pike Research projects that between 2010 and 2015, China will have 1.85 million hybrids and EVs sold, with 1 million EVs on the road. In the U.S. more than 2.3 million hybrids will be sold during that time, and 840,000 plug-in and all-electric vehicles.

China has a great ability to direct its domestic market than the more open U.S. market, and with greater incentives and many first time car buyers on the horizon, it’s understandable that China will pass the U.S. in EV sales. The governments have similar motivations—a desire to reduce carbon emissions, increase domestic production, and enhance energy security by reducing oil imports. While we’ve heard those arguments here for many years, China imported 52 percent of its oil in 2008, and if the country didn’t push EVs during the rapid expansion of the auto industry, that dependency would only increase. China also has the advantage of building out the grid with EVs in mind as they are adding generation and transmission capacity while the U.S. will seek to accommodate EV demand through gains in efficiency and stressing off-peak charging.

Pike Research doesn’t expect the EV market to substantially cannibalize hybrid sales. The U.S. hybrid market has been strong for years and will remain so, while hybrid sales in China are starting from a small base.

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  • calvin

    This is really good news. China is quickly becoming as industrialized as the U.S. But if countries like China and India just follow the U.S.’s lead, we’ll end up with 2 billion more gas-guzzling SUVs and sports cars on the road, which is completely unsustainable.

    With the lack of EV/hybrid adoption in the U.S. we’re really in no position to tell developing countries to go the green route, so it’s great to hear that China is taking the initiative and pushing EV on their own.

    Hopefully India will follow suit and shame the U.S. into quicker adoption of plug-in hybrids and EVs as well.

  • Michael Granoff

    Why would China possibly want to have hybrids? That’s like saying I just got an email account, now will you buy me a fax machine?

  • JBob

    I agree with Michael..

    Just because the US will lead in hybrids means they’ll have the lead only in the near future, but the end goal is gonna be full EV’s simply because they are higher efficiency and will have considerably lower maintenance issues overall.

    You also factor in that the real race is in the battery department, China already has a sizable lead in that area compared to the US.

    For China, the main focus, as it relates to the manufacturing of autos has to be with quality control.

  • JamesDavis

    I also agree with you, Michael. Why would China want to slide backward like the U.S.? Now that China has the lead in EV’s, I am sure they will hang onto it and hopefully embarrass the U.S. into converting over to only EV production. The U.S. is quickly loosing its edge.

  • Alex Campbell

    Thankz for featuring our ZAP Jonway photo. China really is moving quickly on electric vehicles and they have been doing it ever since we started expanding our operations there in 1997, so it is not a new thing.

    ~ Alex Campbell, ZAP

  • Tom Schaffter

    I don’t think Capitalism will let the US give up hybrids for EV’s; the power of the industries which would be affected is just to great: (1) oil, of course; (2) gas distribution; (3) manufacture, replacement, and repair of ICEs; (4) manufacture, replacement, and repair of transmissions; (5) oil changes; (6) manufacture and maintenance of oil filters, oil pumps, fuel pumps, water pumps, air filters, brake pads; (others?).

    Capitalism has many good features, but it contains tremendous inertia, making change very difficult.