China green car policies put locals in driver's seat

Warren Buffett-backed Chinese automaker BYD is set to be among the biggest beneficiaries of Beijing's new drive to promote electric vehicles, which has left hybrid specialists such as Toyota a distant second.

After months of waiting, Beijing announced a pilot scheme on Tuesday for five Chinese cities in its bid to promote green cars in the world's largest and fastest growing auto market.

The handouts favour electric vehicles and plug-in hybrids, a relatively undeveloped field with no clear champions, reflecting Beijing's resolve to foster domestic brands.

"It's clear the government want to push electric vehicles because this indeed is supposed to be the area where Chinese carmakers can compete very quickly," said Klaus Paur, director at industry consultancy TNS's North Asia automotive division.

"The Chinese car manufacturers are the main target for the subsidies and they should be the main beneficiaries."

High costs, performance issues and a lack of charging infrastructure mean no alternative fuel automaker has made inroads in China yet. Analysts estimate that of the 10.5 million cars sold in China last year, just a few hundred were hybrids or electric vehicles (EVs).

But Beijing's new incentives could see consumers buy BYD's F3DM plug-in hybrid at nearly a 30 per cent discount to their price of 169,800 yuan ($24,870).

Other indigenous auto makers with electric or plug-in hybrids in the works including SAIC Motor Corp, Chery Automobile, Geely Automobile Holdings and Chongqing Changan Automobile.