Days after the government announced subsidies for alternative vehicles, EV manufacturers, big and small, scramble for the bounty in the world’s largest automobile market. Daimler leads the pack by announcing a market evaluation of its all electric smart in selected cities. Competition, however, will be fierce.

At an end of the year briefing with journalists in Beijing, Ullrich Walter, Chairman for Daimler Asia, revealed the decision that the firm will begin evaluating the potential for its next generation clean energy vehicles. The news follows a decision from the central government last week that it will subsidise private purchases of alternative-energy vehicles in five cities, still to be announced. The decision follows increased government concern about climate change and air pollution but could also be a reaction to criticism launched against China from the automotive industry that it was not providing enough incentive for EV’s (See article from 3 November).

This has boosted confidence for EV manufacturers such as Daimler who are willing to explore the ‘great opportunities for electric [vehicles] in China’. Government subsidies are pivotal if pricey alternative-energy vehicles are to be feasible in China on a large scale for consumers and producers, Chinese automaker BYD Co. told the Wall street journal.

Import taxes could pose a problem

Daimler is not alone in looking towards penetrating the Chinese EV market. Nissan has announced recently that it will begin market testing in 2011 by offering its LEAF vehicle to government officials and other fleet users in the city of Wuhan. It plans a full scale roll out of the EV by the end of 2011. Furthermore Nissan has announced it is considering building an electric car factory in Guangzhou. Chevrolet is looking to follow a similar timetable with its Volt plug-in hybrid. Toyota has hinted towards a market evaluation of its plug-in Prius.

The China Car Times is rather pessimistic about the potential of foreign electric cars in China stating that the electric smart, produced in France, would already be subjected to a hefty import tax making it much more expensive than locally produced EV. The paper added that the conventional smart for two, introduced in China early in 2009, is already having a much harder time given the higher costs.

For his part Mr. Walter was rather cautious stating that "We have to see the acceptance of this car". "Who are the target groups? What kind of infrastructure do we need?".