China to Provide Further Stimulus for EV Development

As the world’s largest single emitter of greenhouse gases, China is looking at ways to spur the development of electric vehicles and one option, is via government assistance.

From a statement posted on its Web site this week, the Chinese State Council (cabinet), said it plans to increase green vehicle programs, develop plans to recycle batteries and build recharging facilities, all in an effort to support 500,000 electric or plug-in hybrid vehicles on the road by 2015; with a goal of reaching some 5 million by 2020.

Given that China imports around half of its crude oil required for domestic consumption, along with increasing political pressure to improve air quality (many Chinese cities, including Beijing, rank among the most polluted in the world) the need to accelerate green vehicle development is seen as a critical one.

Among automakers selling vehicles in China, both General Motors and Volkswagen have already made significant commitments to plug-in hybrids and EVs; GM, besides introducing the Volt last year, is also developing an EV in conjunction with state owned SAIC Motor Corporation. VW meanwhile, is pressing ahead with plans to introduce EVs to China by 2018.

Although most of the technical R&D regarding EV programs in China is coming from more established Western and Japanese automakers, homegrown companies, such as BYD (Build Your Dreams) have been pushing ahead with plans to introduce their own electric cars such as the E6 (BYD already has extensive experience in vehicle battery technology). That said, given China’s poor record on intellectual property rights, some industry observers believe some established automakers could lose out in the long run through EV joint venture projects.

Nonetheless, steps taken by China to reduce pollution and oil consumption are seen as positive, though if the government plans on achieving its ambitious targets, plus average fuel standards of 5 liters per 100 km (47.04 mpg) it will likely have to increase subsidies on energy-efficient vehicles by a considerable margin (at present buyers in Shanghai, Shenzen and four other cities qualify for a 60,000 yuan/$9,520 subsidy on such cars).

In response to the announcements made by the State Council, Thomas McGuckin, a Shanghai based partner at PricewaterhouseCoopers said “this clarifies the direction for all participants, carmakers, consumers and regulators. The price point, infrastructure and consumer usage patterns will ultimately determine adoption.”

Bloomberg


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