China Stresses Measures to Boost New-energy Car Market

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Nov. 14 – In a move to increase the number of green vehicles on the country’s roads, China is urging new-energy car promotions in 25 major cities. The new regulatory call will likely provide a boost to the green automobile market after the country saw an overall deceleration in car sales partly due to last month’s issuing of a tightened subsidy policy for fuel-efficient car models.

In the “Circular on Promoting the Pilot Demonstration of Fuel-efficient and New-energy Vehicles (caibanjian [2011] No.149)” issued on October 14, the Ministry of Finance (MoF), Ministry of Science and Technology (MST), Ministry of Industry and Information Technology (MIIT) and National Development and Reform Commission (NDRC) made a joint call for the issuance of local incentives for new-energy cars.

The Circular asks local governments of the 25 cities – included in a pilot scheme for new-energy vehicle promotion since last year – to mull exempting new-energy cars from various restrictions on car purchases and map out new favorable policies, such as allowing lower parking fees, power prices and road tolls.

When the new measures are in place, new-energy car buyers in cities such as Beijing, Shanghai, Guangzhou and Dalian may be offered free license plates, and will be exempt from license plate lottery and traffic restrictions.

In addition, the infrastructure for the use of new-energy cars will be largely improved. The pilot demonstration cities are required to build up sufficient electric charging posts at parking lots for the green cars. By the end of this year, the State Grid will build up 75 charging stations as well as over 6,000 charging posts. The amount of charging stations is projected to surge to 400 by 2016 and 10,000 by 2020, according to a report by the Xinhua News Agency.

The latest Circular has signaled China’s intention to shift away from the current restrictive policies on vehicle use to a more comprehensive, long-term strategy that takes both the country’s social and economic benefits into consideration.

“Current policies (car bans and car plate bidding) are twisted,” State Council researcher Chen Qingtai pointed out. “Suppressing car demand is not a wise choice. More parking lots, expressways and energy-saving standards should be considered.”

Echoing Chen’s opinions, Ouyang Gaoming, director of the national laboratory of automotive safety and energy at Tsinghua University, specified that light electric vehicles will become the trend over the next decade.

However, the strategic path China is now taking towards green vehicles still shows uncertainty from time to time. Last month, the MoF, NDRC and MIIT tightened their two-year-old subsidy policy on fuel-saving vehicles, making more than 70 percent of the original 427 models ineligible for the subsidies. Partially impacted by the frustrating policy adjustment, China’s passenger vehicle sales in October dropped 4.2 percent from a year earlier, the sharpest year-on-year decline since 2008.

A recent commentary contributed by Liu Yuanyuan on Renewable Energy also noted the unclear road-map for the future development of China’s new-energy vehicle industry. According to Liu, there is still contention among government departments for what the priority should be in the sector: while the MST considers the pure electric vehicles as a priority, the MIIT emphasizes giving equal treatment to both electric cars and hybrids.

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