China set to subsidize fuel-efficient vehicles

China may soon launch a national subsidy plan for new energy cars to promote development of the domestic new energy car industry. Vice-Minister of Industry and Information Technology Miao Wei says China is seriously considering granting subsidies to new energy car buyers, to be paid by the central government. This would be a long-term policy.
 
"Every car will gain 10,000 to 50,000 yuan of subsidy, depending on to what extent they save energy. The planned subsidy would be quite high, and this is a long-term incentive policy,” declared Miao Wei (http://www.caijing.com.cn/2009-03-12/110119755.html).

Miao was once head of Dongfeng Motors and led the research for Dongfeng's hybrid car. He revealed that several domestic new energy cars have been put into mass production but the sales have not been satisfactory due to high prices. "It's not economical for consumers." This is the biggest problem troubling the development of new energy cars in general, as well as Chinese automakers' biggest concern over the new energy car market.

Miao said the appeal of new energy cars is now more social than economic. To promote its broader development, the government should of course be increasing consumers' environmental awareness, but should also provide subsidies to new energy car buyers.

Subsidies for the new energy-saving vehicles would be directly linked to standards now being formulating jointly by the Ministries of Industry and Information Technology and of Science and Technology. Miao said the standard should be out in two months.

There are three types of new energy cars in China: hybrid, fuel-cell, and electric. Miao said the government has no preference for any of these types, and that companies must make their own judgments.

But he also said that hybrid models are currently the most likely to be successful commercially as battery technology for electric cars still needs improvement.

To be more energy-saving, a hybrid model should use more electricity and less gasoline, but this requires higher technology at higher costs.

"We have acquired all the relevant technology, but the problem is how to integrate it all into an efficient system." Miao Wei said Chery and BYD were making good progress in this area. The two companies have both launched their own electric cars.

He added that the government welcomes foreign automakers to participate in China's development of new energy car. "The government is only a rule maker here, and firms must depend on themselves if they want to excel their rivals."