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Misplaced subsidies?

<box> to go with “A determined government essential to vehicle electrification”

The central government is investing ¥115 billion ($15 billion) in the EV industry over the next 10 years, according to a draft Fuel Saving and New Energy Vehicle Development Plan.

The breakdown, said Chen Quanshi, director of the Automotive Research Institute at Tsinghua University, is ¥50 billion 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 distribution of funds has critics.

“Not all the applicants are qualified to get direct government support,” said Yale Zhang, managing director of AutoForesight based in Shanghai. “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.”

One industrial company that agrees is battery maker China BAK Industries Inc.

“Chinese money is not in the right place,” said Deng Zhongyi, BAK vice president. “Automakers are already strong enough, and ¥100 million subsidy to an automaker is not important to them,” Deng said. “But if a battery producer gets the same amount, it would be extremely helpful to development of better batteries.”

“The government needs to re-evaluate where money should go,” said Deng. “It may be going to some people that didn’t really need it.”

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