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China Taking Uncertain Path Toward Electric Vehicles

China's Energy Saving and New Energy Vehicle Development Plan is still awaiting approval, stymieing the efforts of domestic new energy vehicle producers to map out their development plans and raising concerns that foreign rivals may come in to the local market and grab the new growth opportunities.

Since the beginning of the year, the technologies adopted by new energy cars as well as the development plans and favorable policies for the sector have been drawing the public's attention with a special focus on the quality, supporting facilities and production costs of electric vehicles. Biofuel and fuel cell technologies are also included in the development plan, but so far those remain at the concept stage. Pure electrics and hybrids, though, are gearing up for vast expansion.

The road map for electric vehicles hasn't been determined yet, causing the delay in introducing the plan, said Zhang Shulin, a consultant at the China Automotive Technology and Research Center. In addition, the road map remains as a contentious point of discussion among the various government entities with a hand in the exercise – the Ministries of Science and Technology (MST), Industry and Information Technology (MIIT), and Finance as well as the National Development and Reform Commission (NDRC).

MST considers the electric vehicles as a priority, while MIIT emphasizes giving equal treatment to electric cars and energy conservation.

“We should continue to place value on hybrids while accelerating the development of all-electric vehicles,” said Su Bo, deputy minister of MIIT. Former MST minister Xu Guanhua presented his view whereby the transformation of the automotive industry in China is accelerated through the development of compact-sized electric cars. Xu also put forward specific approaches towards the development of electric cars, including the government's offering of guidance and support, developing clear targets and accelerating the construction of charging infrastructures, as well as introducing incentives such as subsidies and tax exemptions.

Given the debate, some industry researchers called for a clear road map for the future of the sector.

In an article published by the Chinese Communist Party's bi-monthly official journal Qiushi, Chinese Premier Wen Jiabao pointed out that the challenges facing the development of new energy cars needed to be addressed, including issues surrounding the road map, core technologies, investment and preferential policies. 

Attendees at the recent 2011 International Forum on Chinese Automotive Industry Development in Tianjin agreed that developing electric cars is not the only way forward and several approaches need to be brought into play in order to spur the growth of new energy cars in the country.

China did launch a new subsidy policy concerning fuel-efficient cars, effective from Oct. 1. Under the new policy, cars are eligible for the 3,000-yuan ($470) subsidies only if they consume 6.3 liters of gas or less per 100 kilometers, compared with the previous level of 6.9 liters. It is worth noting that a hybrid car buyer can receive a subsidy of 5,000 yuan ($780), compared to up to 60,000 yuan ($9,400) for the buyer of a pure electric car. The policy seems to be sending a strong signal that the country values pure electrics over the energy-saving kind.

China has many advantages when it comes to pure electric cars, including good availability of resources and strong production bases of key parts, according to an industry researcher. However, some industry insiders believe that the hybrid is the more promising option. In addition, some industry researchers indicated that the country ignores the subsidies on new energy car batteries, a major component of the vehicle that plays an important role in the development of electric car technologies and of the sector.

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