China Should Expand Subsidies to Add Hybrids, Geely Says

China, lagging behind its target to put electric vehicles on roads, should expand its subsidy program to include other types of fuel-efficient cars such as hybrids, according to Zhejiang Geely Holding Group Co.

“The criteria to qualify for subsidies should be based on the fuel consumption and emissions of the vehicle, instead of what kind of technology they use,” Li Shufu, chairman of Zhejiang Geely, which owns Volvo Car Corp., told reporters today at the Chinese People’s Political Consultative Conference in Beijing. “The government should expand subsidies to include more types of vehicles, including all sorts of hybrids.”

Li’s comments come as automakers wait for the new central government under incoming Premier Li Keqiang to introduce a plan to promote alternative-energy vehicles and alleviate pollution. Including gasoline-electric vehicles under a subsidy program would be a boon for companies such as Toyota Motor Corp., maker of the Prius hybrid.

“There’s a lot of uncertainty around the political transition,” Max Warburton, a Singapore-based auto analyst at Sanford C. Bernstein & Co., said in a phone interview. “You’ve had a bit of a battle of personality at the top of the Chinese government, between pro-electric vehicle and electric-vehicle skeptics. It’s not quite clear who’s going to be in charge in a few months’ time.”

Support Policy

The Beijing municipal government may unveil policies in the next two months to benefit electric vehicles, including fiscal support and exemption from the city’s lottery for license plates, according to Xu Heyi, chairman of Beijing Automotive Group Co.

Hybrid vehicles shouldn’t be included in the government subsidy plan as it will be “hard to manage,” he said in an interview at the National People’s Congress in the capital.

A three-year trial program that ended last year provided subsidies of as much as 60,000 yuan ($9,650) for electric vehicles and 50,000 yuan for plug-in hybrids. Automakers sold a combined 12,791 such vehicles in 2012, according to Bloomberg New Energy Finance, lagging behind the central government’s target for 500,000 units in cumulative sales by 2015 and 5 million by 2020.

The China Association of Automobile Manufacturers has suggested to the central government to increase the number of trial cities to help promote the development of alternative-energy vehicles, according to Ye Shengji, a deputy secretary general of the auto group.

— With assistance by Tian Ying, and Alexandra Ho

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