China Tells Automakers to Go Electric, Suggests "Incapable" Carmakers Shut Down
By Scott Doggett November 12, 2008
China's National Development and Reform Commission has urged the mainland's major carmakers to co-operate in making electric cars, while suggesting "incapable" carmakers leave the industry, the South China Morning Post
reported Tuesday (subscription required).
"Hybrid vehicles should be just the transition before local carmakers can manufacture their own electric cars or plug-in hybrids," said Chen Jianguo, a deputy head of the industrial co-ordination department of the NDRC, at a vehicle conference in Tianjin over the weekend.
The central government is considering ways to assist the industry, including subsidies to explore new technology and raising the consumption tax for large gas-engine vehicles, the Post reported.
Chen said it's "possible for the government to give a hand financially if carmakers can hand in good proposals with good quantitative analyses."
At the conference, Science and Technology Minister Wan Gang said the ministry would work with the NDRC and the Finance Ministry to promote hybrid vehicles starting next year. At first, the emphasis will be on the country's public transport, taxis and postal vehicles.
Chen suggested "incapable" carmakers, which are recording low sales or have high inventory and poor distribution networks, should sell off or shut down their business.
Too often, he said, local governments wanted to keep poorly performing carmakers in business because they provided jobs. But he warned: "Don't wait until their assets aren't worth a cent."
So far, only two carmakers--Dongfeng Motor and Great Wall Motor (its Kunna EV is pictured)--have announced plans to make electric or plug-in hybrid vehicles.
Increased Consumption Taxes
In response, the consulting firm IHS Global Insight released a statement today in which it said the Chinese government has already increased consumption taxes from 15 percent to 20 percent on automakers it considers high emitters (vehicles with an engine size greater than three liters).
Moreover, the government raised the levy on vehicles with engines larger than four liters from 20 percent to more than 40 percent. At the same time, the tax on vehicles with 1-liter engines has been reduced from 3 percent to 1 percent.
IHS Global Insight said it's clear that the government views alternative fuels and vehicles partly or fully propelled by electricity as a large part of the answer as the country looks to reduce its dependency on oil-based fuels.
Prius Unpopular in China
Some gasoline-electric hybrid models are already on sale in China, with Toyota's Prius one of the first on the market, but it has proven unpopular as a result of its higher price compared with other vehicles in similar classes as many components continue to be imported.
IHS Global Insight said General Motors may face a similarly disappointing response to its Buick Lacrosse hybrid as a result of its price. Local automakers developing their own technology may provide the answer, though.
One of the leaders in the development of such vehicles is BYD, a battery-maker that has moved into the manufacture of cars. "This company has already shown a number of vehicles with a variety of powertrains and has said that it will launch an electric-only vehicle this month," the consulting firm said.
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