Beijing appears to be rethinking its singular focus on electric vehicles to reduce fuel consumption and improve air quality as it becomes increasingly clear that its targets for mass-producing electric vehicles in China are unrealistic.
China had planned to leapfrog a generation of conventional engine technology to develop what Beijing hoped would be an early advantage over the west in electric vehicles. No formal decision has been taken to abandon that plan, but top decision-makers in Beijing see its original timetable as too optimistic.
Wen Jiabao, the Chinese premier, reflected intense debate within the bureaucracy recently in a Communist party journal article that questioned China’s “road map” towards alternative vehicles. Peter Huang, forecaster at consultants IHS Automotive in Shanghai, expected Beijing to shift its focus to “hybrids and all vehicles that can reduce fuel consumption”.
“The shift in focus means that even traditional internal combustion engines could now see beneficial policies,” he said. China’s targets of 1m new-energy vehicles on the roads by 2015 and 5m by 2020 could be revised to include conventional hybrid vehicles, as otherwise the government would struggle to meet these goals, IHS said.
Industry analysts said Beijing had been disappointed by slow progress towards a domestic electric vehicle industry. China’s highest profile electric vehicle maker, BYD – which is backed by US billionaire investor Warren Buffett – has repeatedly delayed plans to commercialise and export its electric vehicles. Government subsidies of up to Rmb60,000 ($9,370) for pure electric vehicles and Rmb50,000 for a new generation of plug-in hybrids are available in five cities on a trial basis, but have seen little take-up.
Chinese buyers have shown little appetite for conventional hybrids. Last year, Toyota sold only one Prius in China, produced by its local joint venture with FAW, according to Namrita Chow of IHS Automotive. Boosting sales of current-generation hybrids would depend on whether government subsidies currently available for electric vehicles are extended to other fuel-efficient vehicles.