News Analysis: China's new energy vehicles fueled up
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E-mail Xinhua, February 13, 2014
A campaign to put more new energy vehicles on the streets of China's cities has set new goals in the hope of stirring up a disinterested domestic market.
A latest announcement from the central authorities included 12 more cities in a program to advance the use of environmentally friendly cars, taking the total number of cities and regions involved to 40.
Given lackluster national sales in 2013, the cities - including Beijing - having been set specific sales targets and are expected to act as icebreakers, getting the sector's frozen situation on the move again.
Cities in eastern regions are required to promote not less than 10,000 units by the end of 2015, while assignments for the rest were set at 5,000 units.
Beijing and Shenzhen have their own targets of 35,000 units, pushing up the total for the 40 cities to around 320,000 units, according to Hongyuan Securities' calculation.
That means at least 160,000 units of new energy cars should be sold this year, over nine times last year's national sales. In 2013, sales of new energy vehicles stood at just 17,642 units, according to the China Association of Automobile Manufacturers.
Although the targets seem implausible, analysts still have faith that the market will take off in the next two years. A research report forecast that the central government would implement an array of measures to guarantee target will be met.
The Ministry of Finance (MOF) has made the first move by renewing subsidies for new energy passenger cars in 2014 and 2015.
The MOF also demanded that local authorities speed up improvements to infrastructure and forbade any preferential treatment for local auto makers.
Echoing the ministry, local governments are pushing forward with favorable measures during their annual legislative conferences, with 12 provinces strongly supporting new energy vehicles.
The government of northwest China's Shaanxi province has signed a preliminary agreement with Samsung SDI of the Republic of Korea to establish China's largest car battery plant and expect to break ground in the second half of this year.
Beijing will construct five large to medium-sized charging stations and 35,700 charging posts for pure electric vehicles and plug-in hybrids, as well as two hydrogen stations for fuel cell cars.
Benefitting from top-down policies, China's auto manufacturers are making their own plans to expand the new energy vehicle market.
BYD Auto, a Chinese automobile manufacturer based in south China's Shenzhen, has strong sales of electric buses and taxis, which are easily seen in Shenzhen and in the provinces of Shaanxi and Hunan.
The proportion of new electric coaches has grown quickly from 2 percent in 2010 to 9.9 percent in 2012. The figure is expected to approach 20 percent in 2013.
Jia Xinguang, an independent auto analyst, believes electrification of public transportation services should be supported by government policy.
Hongyuan Securities made similar conclusion, predicting 20,000 electric coaches would be sold this year and 40,000 in 2015.
Electric family cars still have a bumpy road ahead, according to the brokers, as lagging infrastructure, safety concerns and tradition made price-sensitive consumers hesitate.
Tesla Motors, whose high-performance electric cars have generated a buzz in the U.S. and Europe, is bringing confidence to Chinese car buyers and improving their ecological awareness.
Zhang Junyi, an auto analyst with Roland Berger Strategy Consultants, said that "Tesla could be a catfish put into the sardine pool of China," adding dynamism into the sector. Endi
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