The B2B platform for full-electric and plug-in hybrid electric vehicles: Policy News

China has announced generous subsidies for buyers of electric vehicles and plug-in hybrids. The two-year pilot programme will however in a first time only be available in five major cities.

On 1 June 2010, the Chinese ministry of finance announced the start of a two year pilot programme that will subsidise the purchase of electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) in five major cities. Residents of Shanghai, Hangzhou, Changchun, Shenzhen and Hefei will receive up to 60,000 yuan ($8,800) when buying an EV and as much as 50,000 yuan ($7,320) when buying a PHEV.

"Over the last decade, China has invested about 2 billion yuan in the new-energy vehicle field and mastered many core technologies. China's promotion of new-energy vehicles is bound to spur on a rapid growth and large-scale application of related auto parts technology," says Feng Fei, director of the Research Department of Industrial Economy under the Development Research Center of the State Council.

On May 5 2010, the State Council, China's cabinet, had urged relevant departments to launch implementation details of the incentive plan for new-energy vehicles by the end of May. The subsidy plan was drawn up in cooperation with the MIIT, the Ministry of Finance and the Ministry of Science and Technology.

One clear winner from these subsidies, is the Chinese company BYD who just recently announced a joint venture with the Germain Daimler for the development of EVs for the Chinese market. BYD's all-electric model e6 is since the beginning of 2010 deployed in Shenzhen's taxi fleet.

Social implications

However, the subsidy progromme is not undisputed. Wall Street Journal reports about Chinese bloggers complaining that the government gives more money to the wealthy while the average Chinese in any case cannot afford a car - electric or otherwise.

A place in the top league

China has identified the electric vehicle market as key to develop the country's competitiveness in the automobile sector and close the gab to the Japanese players who lead the game for the moment. Mitsubishi has already started marketing the iMiEV in Japan, the Nissan Leaf's roll-out is scheduled for the end of this year in Japan, U.S. and Europe and both are expected to enter the Chinese market by next year already.  

Industry representatives estimate that this pilot roll-out of the subsidy programme in only 5 cities is intended to test the water in regards to the general acceptance by the people as well as in terms of the actual implementation. If both work out fine, the subsidies are likely to be extended to the whole country.