After several delays, China’s new energy vehicle industry guidelines, the Energy-Saving and New Energy Vehicle Development Plan (2011-2020) (NEV Plan) finally received approval from the State Council on April 18, 2012 to clarify the NEV technology routes.
Compared to the earlier released draft, the approved version pushes forth a unified NEV development strategy coming out of several administrative government departments like the National Development and Reform Commission (NDRC), Ministry of Industry and Information Technology (MIIT), and Ministry of Science and Technology (MOST).
The approved version of the plan states that battery-powered electric vehicles should be the major strategic direction. At present, key efforts should be made to advance the industrialization of battery and plug-in electric vehicles, as well as the popularization of non-plug-in hybrids and fuel efficient vehicles.
The industry development guidelines in the approved version are consistent to another important industry plan released earlier by MOST. The Special Plan for Electric Vehicle Technology Development During the 12th Five-Year Plan (Special Plan) clearly states that plug-in and battery electric vehicles are China’s priority in NEV development.
According to the Special Plan, hybrid technology is maturing. Hybrid vehicles are commercially available and represent a growing segment in the auto market. But plug-in hybrid EVs are still under global research and development. Battery electric vehicles are a step away from commercialization, pending quickening advancement of power battery technology.
Both plans agree that hybrid vehicles are energy-saving vehicles. These vehicles should, by 2015, emerge as the nation’s leader in emissions reduction and energy saving. The Special Plan does not target any volume goals in the development of either hybrid or electric vehicles in the different stages.
“There is no way to skip hybrids if we are going to develop new energy vehicles,” said Wang Binggang, director of supervision and consultation group of the State 863 key project of energy conservation and new energy vehicles. According to Wang, the industrialization of battery electric vehicles takes at least 5 to 10 years. “Both policy makers and car manufacturers are becoming more practical after years of NEV development.”
Special funds not mentioned
The approved NEV Plan however has left out detailed special funds that are earmarked for industry development. The draft version said the government would invest ¥115 billion ($15 billion) in the EV industry over the next 10 years.
The investment package was meant to support different links in the industry. According to Chen Quanshi, director of the Automotive Research Institute at Tsinghua University, ¥50 billion of the package was for R&D, mostly leaning to EVs and PHEVs, ¥30 billion for pilot programs, ¥10 billion for key components and parts, ¥5 billion for charging infrastructure and ¥20 billion for hybrid fuel efficient vehicles.
“The state-owned carmakers, the private ones, the oil companies, the power companies, they all want to get a bite of the big cake,” said Jia Xinguang, a Beijing-based independent auto analyst. Jia thinks the approved version omits the funds issue in order to prevent speculators from seeping in. On the other hand, the government hopes the whole NEV industry should focus on R&D and explore new business models.
The government funds have also aroused critics for their low efficiency. According to Yale Zhang, managing director of AutoForesight based in Shanghai, not all applicants are qualified to get direct government support. “The efficiency of government investment is not very high. A lot of players are trying to get involved, but they have no real technology. The government should set up more standards and use better judgment to allocate money to those who have the determination to do something.”
Industry players in different links had their own complaints to make regarding the government financial support. Companies from the battery sector believed they would do better if the money was injected to the right place.
“Automakers are already strong enough, and a ¥100 million subsidy to an automaker is not such a big deal,” said Deng Zhongyi, vice president of China BAK Industries Inc., which specializes in vehicle-grade batteries. “But if a battery producer got the same amount, it would go a long way toward that firm’s development of better batteries,” Deng said.
Policy details are expected
According to Xu Changming, deputy director of the State Information Center’s information resource department, China’s NEV development should not rely solely on policy. Rather, the key to success lies in the competitiveness of car manufacturers.
Besides, detailed measures of the policy are crucial as well, Xu added. Many Chinese EV makers have complained about the lack of specific measures in subsidy settlement in trial cities.
Earlier reports found that Shanghai-based Zhongke Lifan Electric Automobile Co. had failed to sell countable EVs to private buyers in Shanghai. The company’s president Chen Xiaohai blamed the poor EV sales on the unavailability of specific procedures in getting the promised subsidies. He said the company had sold a few EVs to private buyers in Shanghai but the subsidy never arrived from the local or central government. The lack of subsidy settlements has turned away possible buyers who have shown an interest in the firm’s EVs, he complained.
Chinese securities analyst Wang Liusheng believes that the government should concentrate resources and direct them to the key companies and key fields of the industry. And in turn, he thinks China’s domestic brands will receive increased support from the government.