China’s Push for Hybrid and Electric Cars, But Will Anyone Buy?

Beijing Traffic

Beijing traffic

In announcing an ambitious round of subsidies for green vehicles earlier this month, the Chinese government made it clear that the country isn’t just paying lip service to fuel efficiency. China intends to compete both domestically and internationally in the hybrid and electric vehicle market, even if it means playing catch-up.

The domestic incentives provide discounts of $8,800 electric vehicles, $7,350 for PHEVs, and up to $36,750 for fuel cell vehicles. China was successful with a general vehicle subsidy last year that helped the country surpass the United States as the world’s largest auto market for the first time in history.

At a recent U.S. China Automotive Conference, the technology gap between China and the United States on hybrids and electric vehicles generated a lot of discussion. “In terms of engineering capability, the U.S. is leading, but China is very fast in adopting the technology,” said mechanical engineering professor, Jun Ni, to the Detroit Free Press.

As an export-driven economy, China knows that if it wants to compete in the international car market, it will have to make quality cars that are safe, fuel efficient, and cost competitive. Chinese exports have never had a problem competing on price, but when it comes to autos, Americans will be concerned about the safety and reliability of Chinese cars—regardless of how much money they might save.

Using Green to Break Into New Markets

China hopes to quickly improve quality via collaboration with foreign car carmakers that have spent decades competing in Western markets. At the same time, subsidies for fuel efficient vehicles will help Chinese manufacturers refine their products and reach economies of scale by developing and selling their cars domestically before a wider international release. But whether the government’s new green car incentives will be enough to get the Chinese population buying hybrids remains to be seen.

Take for example BYD’s F3DM, a plug-in hybrid electric vehicle similar to the Chevy Volt. The F3DM recently became available to consumers in China’s largest cities at a price of about $22,000. Subtract the $7,350 incentive and the sticker price drops to about $14,650. That may seem like a great price to pay for an electric car in the United States, but in China, you can buy a gasoline powered F3 (which the plug-in is based on) for $8,750. That’s a hefty premium for the average Chinese driver to pay for a fuel efficient vehicle—particularly considering that the government uses price controls to keep gasoline prices artificially low.

It will likely be years before China becomes a serious competitor in the United States. After all, American consumers will have to get used to the idea that the same country that can’t seem to keep lead paint out of its children’s toys is capable of producing safe and reliable automobiles. Yet, if China’s first cars in the United States are ultra-green hybrids or electric cars, it could go a long way toward validating China’s engineering and manufacturing capabilities—and its serious commitment to owning a big chunk of the growing global market for greener cars.


  • Anonymous

    i sure hope so for everybody’s sake

  • Old Man Crowder

    Yikes. The price of the plug-in version is 2.5 times the cost of the gasoline-only version?!

    If the plug-in Prius were to be priced the same way, that would put it at about $75,000 (at least where I come from). At that price, I’d probably be looking at something a little better appointed, such as a Lexus.

    I can’t imagine that model going mainstream anytime soon — the Prius OR the the F3DM.

  • 38MPG

    Chevy volt: $40000
    Chevy non-volt: $18000

  • Elliot

    As the article mentioned, it will take a lot more than availability to get American consumers on board with Chinese automobiles. Some of the safety reports have been frightening to say the least. Not to mention that some of their recent issues (lead paint, dog food, etc) have really tarnished their image. Consumers might look the other way on a shirt or even a TV….but an automobile is a much type of purchase. I’m not convinced they will ever directly be a major player in the US market.

  • hamilton

    The domestic Chinese auto market is growing like gangbusters. For most of the Chinese and Sino-foreign joint venture auto manufacturers, growing Chinese domestic sales profitably is a LOT more attractive than costly efforts to scrape out a beachhead in the US or Europe.

    But eventually, if the Chinese government succeeds in boosting EV sales domestically (they have no choice, really), as they launch EVs these same Chinese and JV companies will have the chance to get up the learning curve & down the cost curve MUCH faster than their US or European counterparts.

    In the short term, there’s nothing for US nameplates to worry about. But what exactly is a US nameplate, anyway? For many years now, there have been more Buicks sold in China than in the US.

  • Samie

    Speaking in more broader terms, here is what we know.

    1. Other countries in the world will continue to use more energy, meaning they will start acting like Americans, including lifestyles. This is NOT sustainable.
    2. In the future, no one country can grab a large percentage of the worlds natural resources for their own use. This will mean much higher costs in war efforts, diplomacy, & product costs
    3. We must end subsidies to petroleum so to make the cost of oil closer to what would naturally occur within markets. The cheap price of oil will only exacerbate the problems we have in the long-term. The behavior or mindsets we have now will have future consequences.

    China does have one major problem, they need their auto market to expand to increase economic activity but they are unwilling to increase the price of gasoline too much because the auto market would decline.

  • sircharles

    I’m more frightened by two-wheeled-four-wheeled vehicles on the streets of America with Chinese market logos, than I am about a damn safty report; Americans discuss innovation, China produce innovation. I’m convinced that the United States has more to discuss about remaining a major player than they are at doing what major players do. “Put up or SHUT UP!!!”

  • DM Rise

    This is good step took by China to push for Hybrid and Electric Cars. Most of the persons are willing to buy hybrid and electric cars. I think, it will give good result to automobile industry. car key programming

  • Muhammad Habib Jamil

    This is M.Habib Jamil from Pakistan. I am interested to purchased 2 Hybrid cars. Please quote your best price and also guide me that i will import that car in Pakistan. I am waiting your reply as soon as possibel.

    Thanks

    M.Habib Jamil.

  • richie samraj

    Hi I am in trested in your car please quote me on most of the one u manufacture