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EVs poised to grow in China as two major obstacles eased

Though electric vehicles boast the advantage of ultralow use-cost and zero emissions compared with traditional vehicles, the lack of necessary infrastructure and high price pose two major hurdles for their practical use.

The two obstacles will be gradually removed in China as the government is mulling measures to promote EVs in major cities. It plans to have about 10,000 hybrid, plug-in and electric vehicles on the roads this year.

Currently, China’s government subsidies to new energy vehicles are allocated for public buses, taxi fleets, government institutions, sanitation and postal services. Staring from this year, the subsidies will be expanded to individual buyers of new energy vehicles, according to Miao Wei, Deputy Minister of Ministry of Industry and Information Technology (MIIT). Detailed subsidy programs are likely to come out this month, he said. But Miao also warned that government subsidies will be limited and decreased progressively in the future. “Manufacturers of new energy vehicles must work on reducing the cost of their vehicles as volume goes up,” he said.

Government agencies are also working on the State standards on pure electric vehicles, aiming to set up a framework benchmark within the first half of 2010, according to a source from China Automotive Technology & Research Center (CATARC).

China’s State Grid Corporation announced on January 14 to build EV charging facilities in 27 cities around the country within this year. China Southern Power Grid already built two charging stations last December in Shenzhen, where BYD’s F3DM plug-in hybrid cars are sold to government agencies and State-owned companies.

BYD’s chairman Wang Chuanfu said the lack of charging stations is a big hurdle for the promotion of his F3DM. As more charging stations will be built in major cities in China, sales of the F3DM are expected to pick up.

When State standards and subsidies are in place later this year, there is no doubt that many automobile manufacturers will race to tap into this emerging EV market. A number of domestic and global automakers are scrambling into the EV market in China. Chang’an has launched its hybrid Joice (Jiexun). Chery has unveiled its first plug-in hybrid the S18. BYD will launch its pure electric e6 in the first quarter of this year, according to Wang Chuanfu. Multinational players such as Nissan, Toyota, BMW and Daimler have also announced their intention to explore this field in China. Therefore, the country is likely to see a number of EV models running on the roads in the near future.

While Chinese local OEMs have a slim chance to catch up with multinational players in the field of traditional fossil fuel powered vehicles, they are now working hard on plug-in and pure electric vehicles, trying to outrun their international counterparts. With advantages in new energy battery R&D and production, low labor cost, abundant mineral resources and government support, China has a good chance to gain a competitive edge in the development of plug-in and pure electric vehicles.

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