China Adds More Electric-Car Subsidies, Still Ignores Hybrids



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China has launched a new round of subsidies to jump start minimal electric-car sales.

The government will offer up to 60,000 yuan (about $9,800) to buyers of all-electric, "near all-electric," or hydrogen cars until 2015.

But hybrids aren't included under the updated policy.

Street-level smog in Beijing

Street-level smog in Beijing

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China hopes to put 5 million "new energy vehicles" on the road by 2020. According to the BBC, about 27,800 electric vehicles were in use last year--mostly buses.

The new policy is aimed at "accelerating the development of new-energy vehicles, promoting energy saving and reducing air pollution," a government statement says.

But China has found it difficult to accomplish those goals with plug-in electric cars so far.

Despite lofty goals of dominating the electric car segment, China's government hasn't been able to solve the problems that have slowed the roll-out of electric cars in other markets.

Those include the limits of lithium-ion battery technology and a lack of widespread consumer commitment to electrification.

While China is the world's largest car market (with about 18 million vehicles sold a year), its domestic car industry doesn't make cars that meet the standards of those from established global makers.

That's made developing electric cars tough for local makers. And outside the luxury sector, Chinese consumers are among the most price-sensitive anywhere.

Theoretically, hybrids could serve as a transitional step to electric cars.

BYD e6 electric taxi in service in Shenzhen, China

BYD e6 electric taxi in service in Shenzhen, China

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Alysha Webb, who covers the Chinese electric-car industry, says there's more at stake than just reducing pollution.

In a recent ChinaEV post, she says hybrids were excluded from the latest round of subsidies because China intends to become a world leader in a new technology: electric cars.

Hybrid technology is already mature, and the prices of hybrids are going down, she writes, so there's less reason for the government to subsidize them.

The problem is that Chinese companies don't necessarily have the technology to build electric cars.

"The volumes envisioned for local fleets could," Webb writes, "result in new technologies being developed for China, technologies that the rest of the world could benefit from."

Foreign car makers probably wouldn't mind government subsidies for electric cars in China.

At the 2013 Frankfurt Auto Show, Renault-Nissan CEO Carlos Ghosn told the Associated Press the car industry is closely watching how China deals with reducing emissions.

The industry is betting on an "explosion of the electric car" in the country, he said.


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