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China’s Auto Industry Eyes Subsidies For Electric, Hybrid Cars

Beijing’s noxious smog is a reminder of why China needs to step up investments in clean energy. This includes promoting electric and hybrid cars as an alternative to gas-guzzling cars idling on clogged city roads. Yet for all the subsidies lavished on automakers in this carbon-free niche, none have made any serious headway. The much-praised Toyota Prius is supposedly sold in China, but I’ve never spotted one on the road in Beijing. As for BYD, the domestic battery maker turned automaker, its electric cars have yet to find a market outside of public procurement in its home base of Shenzhen. It suffered a bout of terrible publicity last year when a battery-powered e6 taxi caught fire in a collision. Relatives of the dead driver later sued the company, which claimed that the car wasn’t at fault.

China’s government set a target last year of producing 500,000 alternative-energy cars by 2015. Bloomberg New Energy Finance reports that 12,791 electric and hybrids shipped in 2012. That’s a fraction of the 14.6 million passenger cars sold last year in the world’s largest auto market. If at first you don’t succeed, try try again. Automobile industry officials are currently seeking to expand the subsidy program for electric cars to 25 cities, up from five cities in a three-year program that expired last year and kicked in nearly $10,000 per car sold. And Li Shufu, chairman of Zhejiang Geely told reporters Wednesday at a legislative session that electric-car subsidies should be expanded to fuel-efficient cars, including hybrids. Li, whose net wealth we estimate at $2.2 billion, runs a car company that is addicted to subsidies from local governments: some 65% of net profits can be traced to cheap land and guaranteed government sales. So it’s not surprising that his solution to China’s idling electric car dream is more handouts to companies like his.


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