China expected to be bellwether of new-energy auto industry

Industry insiders expect China to become the bellwether of a new-energy automobile industry in the future backed by supportive government policies and battery technologies.

According to a revitalization plan for the automobile industry unveiled in March, the government would allot "special funds" from the central budget to encourage r&d and purchase of new-energy vehicles.

Annual production capacity of new-energy autos are expected to stand at 500,000 units by 2010, and 5 percent of new vehicles, including lorries and buses, will be new-energy ones.

Li Chunbo, the CITIC Securities analyst, was quoted by Xinhua as saying that "China doesn't occupy a leading position in developing traditional oil-fueled vehicles, but it has great potential in new-energy car production, if it takes advantage of policies."

Pei Pucheng, China's Society of Automobile Engineers said that favorable policies would guide more enterprises to engage in the industry, attract more talents and encourage consumption.

Another advantage is that China plays a very important role in battery production, one of the most important parts of a new-energy auto. The performance of batteries directly decides the quality of new-energy automobiles.

According to a CITIC Securities report, China has about 200 lithium battery enterprises, accounting for40 percent of the world battery production.

Domestic automaker BYD Auto and Chery Auto have already made inroad into the sector, with more expected to follow on in the near future.

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