China Appears Poised To Dump Support For EVs

Edmunds Auto Observer, September 8, 2011

Beijing's strategy to electrify the country's automobiles has been extremely ambitious. For more than two years, the Chinese government has tried to leapfrog years of incremental fuel-economy improvements in conventional gas- and diesel-engine technology by massively supporting the development of battery-electric vehicles (BEVs) and plug-in hybrid-electric vehicles (PHEVs). Its often-stated goal: No fewer than 1 million electric vehicles on China's roads by 2015 and 5 million by 2020. But Beijing appears to be on the verge of doing a U-turn on its support for plug-in vehicles, in light of the fact they have proven enormously unpopular despite hefty government incentives to by them.
Premier Wen Jiabao said in July's issue of Qiushi, a leading Communist Party magazine, that "it remains uncertain whether hybrid and electric cars, which are now the focus of much of the development, will be the winners in the end." He cited "problems with their technical path, problems with core technologies, problems with investment, problems with policy support." Meanwhile, intense debate broke out between influential Chinese bureaucrats over the future of the country's green-car industry, with officials of the National Development and Reform Commission and the Ministry of Industry and Information Technology (MIIT) bitterly arguing in public. The NDRC's Li Gang pulled no punches, referring to the "hopeless" prospects of the country's "garbage technology" for electric cars. Former MIIT official Hou Shiguo, offering the ministry's perspective, countered that Beijing was not built in a day.
The heated debate comes less than a year after Beijing announced plans to spend about $15.6 billion on plug-in electric vehicles by 2020. Since June of last year, consumers in five large Chinese cites have been able to get up to $8,785 off the price of a battery-electric car and $7,320 off a plug-in hybrid. Additionally, Beijing announced last year that it would subsidize the construction of charging stations in the five cities. To further stimulate EV sales, Beijing chose the Chinese capital and 24 other cities for large-scale promotion of electric vehicles. Despite the financial incentives and the promotional campaign, only slightly more than 10,000 battery-electric vehicles and plug-in hybrids have been sold in China in the last two years, and less than a tenth of those were sold to private owners.
In a recent article in Britain's Financial Times, Bill Russo of Synergistics auto consultancy in Beijing was quoted "it was simply never realistic for a fledgling auto industry to skip conventional hybrids and immediately electrify." The former head of Chrysler in China said, however, that he does not believe Beijing's probable retreat from making EVs the focus of its green-car strategy will deter China from a long-term goal of electrifying the country's vehicles. "They have planted the seeds for the future EV industry: it is just going to take much longer than they anticipated," he said.


SIAM Presentation on Alternative Powertrains

New Delhi, India, September 7, 2011

Presentation and Briefing paper prepared for the 51st annual convention of the Society of Indian Automobile Manufacturers.