China automakers seek subsidies for hybrid sales

China, the world's second-biggest oil user, wants to boost domestic sales of hybrids and electric vehicles to cut fuel imports and pollution. Subsidizing the cost of the cars may be the only way to make that happen.

Hybrids and electric automobiles account for about 0.01 percent of Chinese passenger-vehicle sales, according to JD Power & Associates China, and they have largely missed out on a demand boom that has put the country on course to surpass the U.S. as the world's biggest auto market. Warren Buffett-backed BYD Co., for instance, sold 31 F3DM plug-in hybrids nationwide in the first seven months of the year.

"We hope the local and central governments will work together to provide subsidies to consumers," BYD Chairman Wang Chuanfu said at an automotive conference in Tianjin yesterday. That would "definitely" help sales.

China has given out subsidies in rural areas this year to help poorer farmers buy regular gasoline-powered vehicles. Similar support may also be needed to reach the government's goal of boosting hybrids and battery-powered car's market share to 5 percent of passenger vehicles by 2011.

"People think they can buy two regular cars for the price of one electric car," said Chery Automobile Co. Vice President Fang Yunzhou. "There are very few people who think about the environment" when picking a new car.

Chery, China's largest of maker of own-brand cars, will introduce its first plug-in electric car, the S18, next year. A plug-in car can be recharged from a regular household powerpoint. BYD's F3DM plug-in starts at 149,800 yuan ($22,000), compared with from 59,800 yuan for a similar-sized gasoline-powered F3. The automaker, part-owned by Buffett's Berkshire Hathaway Inc., plans to sell start selling hybrids in the U.S. next year.

Surging Market

China's overall vehicle sale jumped 23 percent in the first seven months to 7.2 million. Sales of Toyota Motor Corp.'s Prius, the world's bestselling hybrid, fell 32 percent to 271. By contrast, in the U.S., hybrids have outperformed the wider market this year, boosting their market share to 2.8 percent. Sales fell 16 percent through August to 200,796, compared with a 28 percent drop in the overall market.

Support for hybrids may be unpopular, said Chen Jianguo, deputy head of industry coordination at the National Development and Reform Commission, the government's top planning agency.

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