China to Give Stimulus for Development of Electric Vehicles

China, the world’s biggest emitter of greenhouse gases, said it will provide financial support and individual subsidies to promote the use and development of electric and plug-in hybrid vehicles.

The government will broaden pilot programs, build recharging facilities and develop a plan to recycle batteries, as part of a drive to have 500,000 such vehicles by 2015, rising to 5 million by 2020, the State Council, or cabinet, said in a statement posted on its website yesterday.

“This clarifies the direction for all participants, carmakers, consumers, regulators,” said Thomas McGuckin, Shanghai-based partner who oversees the Asia Pacific automotive practice at PricewaterhouseCoopers LLP. “The price point, infrastructure and consumer usage patterns will ultimately determine adoption.”

General Motors Co. (GM) and Volkswagen AG (VOW) have announced plans to introduce so-called new-energy vehicles in China, which is seeking to cut smog and its reliance on imported oil. BYD Co. (1211), the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/B), will show next week the first electric vehicle model developed through its venture with Daimler AG. (DAI)

The State Council said in the statement that development should be built on existing production capacity and that the industry should guard against “blind, low-quality investment and wasteful construction.” The government will target to lower the average fuel consumption of passenger cars to 5 liters per 100 kilometers by 2020, according to the statement.

Government Subsidies

Currently, buyers of energy-efficient cars in Shanghai, Shenzhen and four other Chinese cities qualify for a 60,000 yuan ($9,520) subsidy.

Electric-car sales in China are forecast to exceed those in the U.S. by 2020, Boston Consulting Group Inc. said in a June 14 report. Such cars may account for as much as 7 percent of total auto sales in China, the world’s largest vehicle market, by 2020, Boston Consulting said in the report.

China imports more than half of its crude oil consumption, and is the world’s second-largest importer of oil after the U.S., giving it incentive to encourage use of more fuel- efficient vehicles.

The country is also trying to reduce smog. Air quality in all of the 32 Chinese cities that track pollution falls short of World Health Organization guidelines, with Beijing among the world’s most polluted cities.

GM, the largest foreign carmaker in China, introduced its Chevrolet Volt plug-in hybrid car in the country on Nov. 21. The Volt will complement an all-electric car that GM is developing with its Chinese partner, SAIC Motor Corp. (600104), the automaker said.

Volkswagen plans to mass produce electric vehicles in China in 2018, the German carmaker’s China Chief Executive Karl-Thomas Neumann said in Beijing on Feb. 14. Nissan Motor Co. (7201), which leads Japanese carmakers in China deliveries, plans to export its all-electric Leaf car to the country for fleet sales, the Yokohama, Japan-based company said in September.

To contact Bloomberg News staff for this story: Ma Jie in Tokyo at jma124@bloomberg.net; Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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