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China’s Round Two on Electric Cars: Will It Work?

Everyone loves China’s five-year plans. They tell you everything you need to know about the future direction of the Chinese economy: intentions and priorities, along with timetables and targets. The only thing missing are the results. After five years, though, who keeps track of what was promised and what was delivered? Well, the Chinese government for one. And as Beijing takes stock of its efforts to become a world leader in the production and deployment of electric and hybrid electric cars during the Twelfth Five-Year Plan (2011-2015), the picture isn’t pretty. Now Beijing is attempting a mid-plan course correction. Will it work?

First, where does Beijing want to be and where is it now? In 2009, the government-established targets for pure electric and hybrid electric vehicles of 500,000 by 2015 and 5 million by 2020. Its original “ten cities, thousand vehicles” program, launched that same year, planned for ten cities to develop 1,000 electric vehicles each; by 2011, the list of cities had expanded to twenty-five. Subsidies of 50,000-60,000 yuan (US$8,000-9,600) were offered to consumers who purchased the cars. (By one account, however, central and local government subsidies can reach as high as US$16,500 on cars priced US$32,900-49,400.) By the end of 2012, however, only seven of the twenty-five cities had met their 1,000 car target. And in 2013, only 17,600 hybrid and electric vehicles (cars and buses) were sold. According to a NewsChina Magazine report in April 2014, “with one year to go, China is still about 480,000 units away from meeting its first stated target.” This early report card is not only dismal but also dangerous for a country facing skyrocketing air pollution and a related public health crisis. Moreover, China’s annual automobile sales, already the largest in the world, have not even begun to achieve their potential.
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