SHANGHAI -- China has rolled out a new incentive program for
fuel-efficient cars and buses to encourage the use of environmentally friendly vehicles as
the country battles staggering levels of pollution.
With immediate effect, buyers of electric cars will receive
up to 60,000 yuan ($9,800) in subsidies while buyers of certain
gasoline-electric hybrids may get as much as CNY35,000, the
Ministry of Finance said Tuesday. The subsidies will be lowered
by 10% in 2014 and another 20% in 2015 from current levels, it
The program is to "speed development of the new-energy
automobile industry, reduce emissions and help control
pollution," the ministry said in a statement published on its
Earlier this year, Beijing saw a bout of intense air
pollution over a series of weeks in an episode dubbed an
"airpocalypse." Residents stocked up on face masks and air
purifiers while large swathes of the country had similarly
hazardous levels of pollution.
Such events have prompted Chinese leaders to scramble to get
ahead of the pollution challenge and show an angry public that
they are serious about cleaning up the environment.
Global auto makers are rushing to launch electric vehicles
in China over the next few years. Daimler and BYD will start
producing Denza, an electric car, later this year, and the car
will go on sale in 2014. Toyota Motor unveiled its new hybrid
Yundon-Showanchin II in April, which was developed specifically
for China. It plans to start local production of key hybrid
components by 2015.
Analysts said the impact of the new subsidies may be
limited, however. They noted that the subsidies are slightly
less generous than the last batch of subsidies, which expired
at the end of last year.
Under the previous program, China offered a maximum subsidy
of CNY60,000 for every electric car and CNY50,000 for every
hybrid vehicle. But even with the help of those subsidies,
Chinese consumers bought only 11,375 electric cars in 2012, a
paltry tally in the world's biggest car market, where total
vehicle sales reached 19.3 million the same year, according to
the China Association of Automobile Manufacturers.
"Car makers will have to make their energy-efficient
products more competitive to attract buyers," said Yale Zhang,
managing director of consulting firm Automotive Foresight.
Sales of energy-efficient cars will also be limited in the
near term due to an underdeveloped battery-recharging
infrastructure coupled with the higher sticker price for
electric cars compared with their gasoline-powered
counterparts, analysts said.
China is far short of reaching its goal of having 500,000
hybrid and electric cars on its roads by 2015 and five million
by 2020. Analysts say the odds of meeting those targets are
In a bid to promote the use of green vehicles, the Finance
Ministry on Tuesday also called on local governments such as
Beijing and Shanghai to buy more fuel-efficient cars and buses
for their official fleets. For instance, it said when
government agencies and public institutions purchase new motor
vehicles, fuel-efficient vehicles must account for at least 30%
of the new purchases.
The Finance Ministry also said it would offer a maximum
subsidy of CNY500,000 per unit for buyers of electric buses
between 2013 and 2015.
In Beijing, one of China's most congested cities, auto emissions account for about
one-third of PM2.5 -- particulate matter measuring less than
2.5 micrometers in diameter -- official data show.
Dow Jones Newswires