Chinese cities embrace EV, plug-in hybrid subsidies to curb smog
Three of China's biggest cities are helping consumers pay for a range of electrified vehicles, heeding calls to encourage the sale of green cars to ease severe air pollution.
China's smoggy skies topped the agenda at the annual parliamentary session this year, while Premier Li Keqiang in January demonstrated the importance of green cars by visiting a factory of BYD Co., maker of the e6 electric car.
The central government wants to put 10 times more electric cars and plug-in hybrids on the road by next year. But traffic management is handled by local authorities, and many cities including the polluted capital of Beijing have not given green cars a high priority.
Tianjin lacked the means to issue license plate numbers for EVs, while in Shanghai, only Shanghai-made vehicles were eligible for local subsidies.
But last month, the cities said they would subsidize purchases of electric and plug-in hybrid cars from companies such as BYD, SAIC Motor Corp. and Anhui Jianghuai Automobile Group JAC Motors even if they weren't locally produced.
China currently has 50,000 "new energy" vehicles -- defined in China as electric, plug-in hybrid or fuel cell, well short of a government target for half a million by 2015 and 5 million by 2020.
"This is the goal to strive toward, with the numerical targets putting pressure on carmakers," said Luo Xing'an, secretary general of the Guangdong Automobile Association. "But there's no guarantee these targets will be met. The foundation of the industry is not yet solid."
Many other industry executives regard the targets as impossible, but China could edge closer if more cities broaden subsidies for which in many instances only locally made cars have been eligible.
BYD, for instance, sells most of its electric cars in its hometown of Shenzhen, where more than 800 e6 taxis are on the road. The city offers subsidies for EVs and plug-in hybrids provided they have a range of 300 km per charge, a criterion that only the e6 satisfies. That effectively shuts out rival models such as SAIC's Roewe E50 and JAC Motors' iev.
Local subsidies
Rapid economic growth and urbanization have turned China into the world's biggest emitter of greenhouse gases, with pollution a constant feature in newspapers and a topic widely discussed in the Chinese blogosphere.
The government has vowed to fight pollution and since 2010 has been encouraging consumers to buy green cars. Under its latest initiative, it offers to pay up to 60,000 yuan of the purchase price, an amount that local authorities are encouraged to match.
Before last month, Shanghai only subsidized EVs and plug-in hybrids that could accelerate from zero to 50 kph in 6 seconds. Coincidentally, only models from Shanghai-based SAIC and Shanghai Zhongke Lifan Electric Vehicle Co. met that standard.
In Beijing, the inability to obtain license plates for electric cars prior to February meant the local automaker BAIC Motor Corp.'s E150 faced only limited competition when it debuted this month.
But in September, the central government said nonlocal cars should make up at least 30 percent of a city's EV sales.
"Shanghai and Beijing are under pressure from the central government so they're setting an example of easing restrictions," said Namrita Chow, an analyst at consultancy IHS Automotive.
In Tianjin, the authorities only opened the market to green cars in January after BYD agreed to build an electric bus factory in the city.
"Given the current situation in promoting EVs, it's necessary for the company to make some investment when needed in exchange for access to new markets," BYD said in an emailed statement to Reuters.
Foreign onslaught
The opening up of city markets is likely to support China's fledging electric car industry before an inevitable onslaught from foreign brands, most of which will not be eligible for subsidies.
Tesla Motors Inc. is taking Chinese orders for its Model S; BMW will import its i3 this year, and Volkswagen AG plans to sell more than 15 models in China by 2018.
Unlike the luxury cars of Tesla and BMW, Chinese models are aimed at the lower-priced end of the market. But even with subsidies, prices are high.
IT engineer Zhang Shuai, 32, paid 240,000 yuan ($38,800) for a BYD e6 after receiving 114,000 yuan in Beijing and central government subsidies this month. China's top-selling gasoline-fueled model, the Ford Focus, costs half as much.
"Most of my friends and relatives were opposed to me buying the e6," said Zhang. "I'm a fan of electric vehicles, but many people in China are still skeptical."
The central government wants to put 10 times more electric cars and plug-in hybrids on the road by next year. But traffic management is handled by local authorities, and many cities including the polluted capital of Beijing have not given green cars a high priority.
Tianjin lacked the means to issue license plate numbers for EVs, while in Shanghai, only Shanghai-made vehicles were eligible for local subsidies.
But last month, the cities said they would subsidize purchases of electric and plug-in hybrid cars from companies such as BYD, SAIC Motor Corp. and Anhui Jianghuai Automobile Group JAC Motors even if they weren't locally produced.
China currently has 50,000 "new energy" vehicles -- defined in China as electric, plug-in hybrid or fuel cell, well short of a government target for half a million by 2015 and 5 million by 2020.
"This is the goal to strive toward, with the numerical targets putting pressure on carmakers," said Luo Xing'an, secretary general of the Guangdong Automobile Association. "But there's no guarantee these targets will be met. The foundation of the industry is not yet solid."
Many other industry executives regard the targets as impossible, but China could edge closer if more cities broaden subsidies for which in many instances only locally made cars have been eligible.
BYD, for instance, sells most of its electric cars in its hometown of Shenzhen, where more than 800 e6 taxis are on the road. The city offers subsidies for EVs and plug-in hybrids provided they have a range of 300 km per charge, a criterion that only the e6 satisfies. That effectively shuts out rival models such as SAIC's Roewe E50 and JAC Motors' iev.
Local subsidies
Rapid economic growth and urbanization have turned China into the world's biggest emitter of greenhouse gases, with pollution a constant feature in newspapers and a topic widely discussed in the Chinese blogosphere.
The government has vowed to fight pollution and since 2010 has been encouraging consumers to buy green cars. Under its latest initiative, it offers to pay up to 60,000 yuan of the purchase price, an amount that local authorities are encouraged to match.
Before last month, Shanghai only subsidized EVs and plug-in hybrids that could accelerate from zero to 50 kph in 6 seconds. Coincidentally, only models from Shanghai-based SAIC and Shanghai Zhongke Lifan Electric Vehicle Co. met that standard.
In Beijing, the inability to obtain license plates for electric cars prior to February meant the local automaker BAIC Motor Corp.'s E150 faced only limited competition when it debuted this month.
But in September, the central government said nonlocal cars should make up at least 30 percent of a city's EV sales.
"Shanghai and Beijing are under pressure from the central government so they're setting an example of easing restrictions," said Namrita Chow, an analyst at consultancy IHS Automotive.
In Tianjin, the authorities only opened the market to green cars in January after BYD agreed to build an electric bus factory in the city.
"Given the current situation in promoting EVs, it's necessary for the company to make some investment when needed in exchange for access to new markets," BYD said in an emailed statement to Reuters.
Foreign onslaught
The opening up of city markets is likely to support China's fledging electric car industry before an inevitable onslaught from foreign brands, most of which will not be eligible for subsidies.
Tesla Motors Inc. is taking Chinese orders for its Model S; BMW will import its i3 this year, and Volkswagen AG plans to sell more than 15 models in China by 2018.
Unlike the luxury cars of Tesla and BMW, Chinese models are aimed at the lower-priced end of the market. But even with subsidies, prices are high.
IT engineer Zhang Shuai, 32, paid 240,000 yuan ($38,800) for a BYD e6 after receiving 114,000 yuan in Beijing and central government subsidies this month. China's top-selling gasoline-fueled model, the Ford Focus, costs half as much.
"Most of my friends and relatives were opposed to me buying the e6," said Zhang. "I'm a fan of electric vehicles, but many people in China are still skeptical."
