China ramps up EV drive

The government is increasing incentives for carmakers and consumers in a bid to reduce pollution

In March, Premier Li Keqiang declared China's "war on smog" in response to public concern about stifling pollution in the nation's major cities.

The government is now opening up green car markets across China to help combat smog, offering up generous subsidies for buyers of New Energy Vehicles (NEVs).

In it's latest initiative, the government has offered as much as 60,000 yuan ($9,650) off the purchase price of NEVs in Beijing, Shanghai and Tianjin - an amount local authorities are being encouraged to match.

With the subsidies, a 354,000 yuan ($54,700) BYD e6 would cost just 240,000 yuan ($38,600). However, despite the substantial discount the e6 still costs twice as much as a Ford Focus, China's top-selling petrol-powered car.

Subsidies would be reserved for Chinese carmakers such as JAC Automotive and Warren Buffett-backed BYD Motor Co. Nevertheless, Tesla launched its luxury Model S in China last month and BMW is slated to import its i3 EV sometime this year. Volkswagen Group will also work with joint venture partners SAIC Motor Corp and FAW Motor Group to develop fuel cells and plug-in hybrid powertrains, while planning to release 15 NEVs in China by 2018.

Vice Premier Ma Kai has also discussed cutting sales tax for EV buyers as part of the initiative to spur demand. According to comments made by the Vice Premier on chinaev.org, the government may waive the 10% sales tax for NEVs, which includes plug-in hybrids, electric vehicles and fuel-cell vehicles.

A proposal to use emissions taxes to finance NEV development and subsidies, encouraging public transport providers to switch to electric buses and floating the notion of an EV-only rental services in the nation's major cities are also being studied as means to encourage greater adoption of NEVs.

More than five years after the first round of subsidies, there are fewer than 70,000 NEVs on the road, trailing state targets of 500,000 by 2015 by a considerable amount. The government is aiming to sell ten times the amount of NEVs this year compared to last. Ma claims that reluctant local authorities and a lack of a comprehensive charging network were to blame for slow sales.