By Colum Murphy
SHENZHEN—China is weighing a new tax on gasoline to fund efforts to make electric cars more palatable to Chinese consumers, according to Wang Chuanfu, chairman of electric-car maker BYD Co.
In an interview, Mr. Wang said given the number of conventional cars on the road in China, even a small tax of 0.2 yuan a liter of gasoline—equivalent to about 12 cents a gallon—could yield “hundreds of billions” of yuan in tax revenue that the government could redirect to policies that increase the appeal of green cars.
The price of a liter of gasoline in Shanghai is about 7.75 yuan ($1.26).
“While the government ca’t force consumers to buy electric vehicles, it can mandate the construction of charging stations,” said Mr. Wang. “If government subsidies can account for 50% of an electric vehicle’s value, it will make it as cheap as an ordinary car. If so, I think consumers would like to buy it.”
Mr. Wang did’t say whether the potential tax would become policy or which government department was working on it, saying only it was “under consideration” by the government.
China’s State Administration of Taxation and its Ministry of Finance did’t respond to requests for comment. Calls to the National Energy Administration went unanswered.
Challenges for electric cars in China include a lack of charging stations and high prices for some models. BYD’s first-half sales of electric cars and electric-gasoline hybrids totaled about 7,600, well short of the 180,000 traditional cars it sold.
Electric-car companies are working to address those issues. Tesla Motors Inc., which has ambitions to sell large numbers of cars in China, said on Friday it struck an agreement with state-owned telecom operator China Unicom (Hong Kong) Ltd. to build 400 charging stations in 120 cities.
Dong Xiucheng, director of the China Oil and Gas Center at the Beijing-based China University of Petroleum, described such a tax as “unrealistic.” He said gasoline prices in China already carried a lot of taxes, and he did’t see the need for additional ones for electric-vehicle subsidies.
A report by a research unit of state-owned oil giant China Petroleum & Chemical Corp. last year said taxes account for about 30% of retail gasoline prices in China, less than the 39% levied in Japan but around three times the rate in the U.S.
In 2012, the Chinese government established an ambitious target to have 500,000 new-energy vehicles—including electric vehicles and hybrids that run on either gasoline or electric power—on the road by 2015. It hoped to have five million by 2020, including passenger cars, trucks and buses.
In the first half of 2014, 16,483 new energy passenger cars were sold in China, up from 7,322 in the year-earlier period, according to consulting firm Automotive Foresight. By contrast, more than 18 million passenger vehicles were sold in China last year.
In recent months, China has announced a fresh wave of policies to promote greater use of green-energy vehicles to help battle air pollution and reduce dependency on imported oil. In July, the State Council said China will exempt purchase tax for all electric cars sold in China, including imported ones. Other supporting policies include subsidizing buyers of electric vehicles and offering favorable electricity prices for charging stations. (Rose Yu contributed to this article.) (Reprinted from Wall Street Journal)