China Makes EVs the Auto Industry Priority

China released a plan that makes electric vehicles (EVs) the top priority for transportation through increased financial support, individual subsidies, building recharging stations, and widening pilot programs.

The plan is meant to "promote the transformation and upgrading of the auto industry, speed up the cultivation and development of energy-saving and new energy automotive industry, and to ease pressure on energy and the environment," says China’s State Council statement.

Electric and plug-in vehicles will be the industry priority, along with the wide use of hybrid and energy-saving combustion-engine powered automobiles.

The goal is for 500,000 EVs on the road by 2015 and 5 million by 2020. It also calls for the average passenger car to consume 6.9 liters of gas per 100 kilometers by 2015 and 5 liters per 100 kilometers by 2020.

Although the government offers rebates of $9,400 for electric vehicles and $7,800 for plug-in hybrids in five pilot cities, conventional cars are still cheaper and perceived as more reliable.

EV sales have been very slow, with only 8159 sold last year. People that have the money prefer SUVs – demand rose 20% last year, triple that of passenger cars, according to China’s Association of Automobile Manufacturers. In fact, carmakers are calling 2012 the Year of the SUV.

Those that don’t have high incomes can’t afford EVs, such as BYD’s e6, which costs $38,430 after big rebates. There are also few charging stations. Even Prius sales have been slow.

The 2012-2020 plan clarifies regulations and incentives for automakers, state officials and car buyers, which currently get a $9520 subsidy in pilot cities.

Because of this certainty, China’s EV market is expected to expand faster than that in the US, which lacks any concrete policy.

The plan also calls for establishing a research and development program to achieve breakthroughs in core technology, a substantial increase in vehicle fuel economy levels, lightweight, reliable batteries, and a battery recycling infrastructure.

"We need to increase tax and financial policy support, and create a market environment conducive to industrial development, scientific research and actively carry out international cooperation," the plan says. Development of the clean auto industry should be built on existing infrastructure, rather than redundant construction.

GM introduced the Chevy Volt in November and is developing an all-electric car with a Chinese partner, SAIC Motor. Nissan plans to export the Leaf to China for fleet sales and Volkswagen will introduce the Kaili EV with partner FAW Group in 2013 or 2014. Smith Electric Vehicles and China’s biggest automotive components manufacturer have a joint venture to manufacture commercial EVs in China.

China, the world’s second biggest oil importer after the US, wants to cut dependence and also wants to reduce smog. Beijing is in one of the most polluted cities in the world, and all 32 cities have poor air quality.

Last year, China said it would invest $1.5 billion a year for the next 10 years to create a leading EV manufacturing industry – one of its stated top priorities. The government called for 25 pilot cities to develop ways to jumpstart an EV market by installing charging stations and other means. But that has yet to materialize.

Tiny EVs Selling Well

To buy a car in China, people have to participate in license plate auctions and buy insurance, but not if they buy a mini-electric car. Those are selling well and mostly non-licensed entrepreneurs are jumping to sell them.

Costing only $5000, it gives people who would otherwise ride bicycles or motorcycles a way to get into a car.

An estimated 260 million people, mostly living in rural areas, still rely on bicycles and motorcycles as their main mode of transportation.

The tiny electric car isn’t considered "clean." The slow-speed cars run on cheap lead-acid batteries, which create pollution during production and disposal.

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