China to Subsidize Electric Cars and Hybrids

The Chinese government appears determined to electrify transportation, and it is putting money in place alongside its rhetoric.

To that end, the Chinese Ministry of Finance announced on Tuesday a pilot program in five cities to subsidize the purchase of electric and hybrid cars. It is unclear when the program will begin.

According to Xinhua, the official Chinese news agency, consumers in those urban areas will be able to get up to around $8,785 off the price of a battery car and about $7,320 off plug-in hybrids. The money will be paid directly to carmakers, which will reduce the vehicle price accordingly, the government said.

Nationwide, consumers will be able to access a much smaller subsidy of $439 if they buy fuel-efficient cars with engines under 1.6 liters.

Reuters reported that the government would subsidize the construction of charging stations and battery recovery networks in the five cities: Shanghai, Shenzhen, Hangzhou, Hefei and Changchun.

Directly subsidizing purchases could “jump start” the electric vehicle market in China, said Craig Giffi, an analyst at Deloitte.

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China to Subsidize Alternative Energy Car Purchases

June 1 (Bloomberg) -- China is subsidizing alternative- energy cars in five cities to increase their attractiveness for buyers to reduce reliance on fossil fuels and improve air quality.

The government will provide as much as 50,000 yuan ($7,320) for purchases of plug-in hybrid models, which run partly on gasoline, and as much as 60,000 yuan for cars powered only by batteries, a statement on the Ministry of Finance’s website said today. Car buyers in Shanghai, Changchun, Shenzhen, Hangzhou and Hefei are eligible for the subsidies on a trial basis.

China, which became the world’s biggest car market last year, aims to increase the annual production capacity of alternative-energy vehicles to half a million units by 2011 as part of efforts to cut oil imports and rein in pollution.

“Government funding is a very strong factor in helping alternative energy car market growth, but this is only the first step in getting there,” Jacob George, China managing director at JD Power & Associates, the marketing information company, said in an interview today. “It’s also the investment in infrastructure to increase the receptivity of consumers.”

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