China Requires Electric Vehicles to Make Up 30 Percent of State Purchases

China Requires Electric Vehicles to Make Up 30 Percent of State Purchases

China is mandating that electric cars make up at least 30 percent of government vehicle purchases by 2016, the latest measure to fight pollution and cut energy use after exempting the autos from a purchase tax.

Central government ministries and agencies will take the lead on purchases of new-energy vehicles, a term that China uses to refer to electric vehicles, plug-in hybrids and fuel-cell autos, according to a statement on the central government’s website yesterday. The ratio will be raised beyond 2016, when local provinces are required to meet the target.

China is stepping up support for electric vehicles as demand lags behind its target because of consumer concerns over price, reliability and convenience. The government has identified EVs as a strategic industry to help it gain global leadership, reduce energy dependence and cut smog that often reaches hazardous levels in Beijing and other cities.

“This is a laudable aspiration,” said Yang Song, a Hong Kong-based analyst at Barclays Plc, who estimates that government purchases made up less than 10 percent of total new vehicle sales in China. “Government purchases are not growing as fast as private consumption. So just to rely on the government purchase would be a challenge.”

Last week, China announced the waiver of a 10 percent purchase tax for new-energy vehicles, excluding them from the levy beginning Sept. 1 to the end of 2017, the central government said in a statement posted on its website on July 9.

BYD Co., the electric automaker partially owned by Warren Buffett’s Berkshire Hathaway Inc., climbed 3.6 percent to HK$48.90 as of 11:47 a.m. in Hong Kong trading. The benchmark Hang Seng Index gained 0.4 percent.

Electric Vehicles

The measures announced yesterday by the National Government Offices Administration also direct agencies to give preference to all-electric vehicles in purchases, while cold-weather jurisdictions may consider plug-in hybrids. Electric sedans should cost no more than 180,000 yuan ($29,000) after subsidies.

Government organizations and public institutions will be required to add parking spaces reserved for new-energy vehicles and ensure the ratio of charging facilities to the vehicles is equal, according to the plan.

Local officials will be held responsible if the targets aren’t met, according to the statement.

Copyright 2014 Bloomberg

Lead image: Electric vs fossil car via Shutterstock

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