Electric car on front burner
China has set up an electric-vehicles association in its latest effort to encourage wider commercialisation of the costly technology.
The new group, made up of state-owned automakers and other related manufacturers, will promote common standards and accelerate research among related state-owned companies, Li Rongrong, head of the government agency in charge of state assets, said in a speech Wednesday posted on the agency's website.
The 16 manufacturers and research institutes belonging to the new group include major automakers China FAW Corp, Dongfeng Motor Corp. and China Changan Automobile Group. Others include state-owned battery makers and main electricity distributor State Grid Corp.
Developments in the electrical-vehicle area so far have come through joint ventures with foreign automakers, such as General Motors Corp, or through independent automakers, like BYD Auto, a dominant battery maker that has successfully branched into car making.
China has sought to gain control over technology innovation through a slew of policies, and the new group appears to represent an attempt by the government to join forces to exert greater control over electrical vehicle development.
It also could enable automakers that lack the wherewithall to launch electric vehicles on their own to benefit from collaboration with state companies that dominate battery making and electricity distribution.
"The message is that the government really wants to boost the new energy-car industry," said Zhang Xin, an analyst at Guotai Junan Securities in Beijing.
"It really matters who gets the lead in this market and who sets the standards. China lags the advanced countries in conventional auto technology but this area offers new opportunity," Zhang said.
China has vowed to slash emissions of carbon dioxide and other pollutants by boosting energy efficiency. The country is also seeking to limit imports of costly crude oil. But soaring auto sales, forecast to rise 30 per cent from 2009 to 17 million this year, are slowing progress toward those goals.
Although some hybrid cars are sold in China, pure-electric vehicles have so far mainly been used in China only for demonstration purposes or in government and corporate fleets. Sales of so-called 'new energy' vehicles account for only five per cent of all passenger car sales, Li said.
Manufacturers have lobbied for government help in defraying the higher costs for such vehicles until sales are large enough in scale to bring production costs down to more manageable levels, and recently the government began paying subsidies of up to 60,000 yuan (US$8,784) a car to manufacturers of electric and hybrid vehicles on a trial basis in five cities.
Separately, private buyers of such cars can get a 3,000 yuan (US$440) subsidy from dealers.
The Ministry of Information and Industry Commission is due to submit a draft plan for development of energy-efficient and new-energy vehicles to China's cabinet, or state council, this month, the newspaper Global Times reported.
It said the government would invest 100 billion yuan (US$14.7 billion) to support the industry by 2012.