China Seen Stepping Up Push for Electric Cars in Five-Year Plan

  • China is behind on its EV sales, with 22% of end-2015 target
  • China may encourage local carmaker consolidation to compete

China may increase its emphasis on achieving targets for adoption of electric vehicles in the next five-year plan and continue to encourage consolidation among local carmakers, according to a Bloomberg Intelligence report.

The ruling Communist Party, which will present the 13th Five-Year Plan at a plenum in October, may prioritize the building of more charging stations and improving the efficiency of batteries to address the shortage of places to recharge, high costs and limited driving range, according to a report by BI analysts Steve Man and Ji Shi.

China is supporting new-energy vehicles, with electric autos as the mainstay, as part of a strategy to reduce tailpipe emissions and its dependence on imported oil. The government has doled out subsidies to carmakers and battery suppliers while exempting EVs from purchase restrictions in cities. Even so, there are only about 220,000 EVs nationwide, or about 22 percent of the target for the end of 2015, according to BI analysis.

With more than 100 carmakers in China, small and struggling manufacturers may become targets for Internet companies seeking licenses to manufacture cars, according to the report. Having fewer local car companies also helps pool resources and enable them to better compete with global auto brands, which Chinese consumers overwhelmingly prefer, the analysts said in the report.

China’s State Council, or cabinet, reiterated Tuesday its support for new-energy vehicles and warned local governments not to restrict the purchase or use of EVs. The central government also warned local authorities that it will cut back on fuel and operational subsidies if they lag behind on adoption of new-energy buses for public transportation.

— With assistance by Kongho Chua

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