China’s Subsidy Program Fails to Jump-Start Purchases of Alternative-Fuel VehiclesJune 21st, 2011 | Posted in Electric Car | Regulations
The central government’s program to subsidize private purchases of alternative-fuel cars in 5 cities (Shanghai, Hangzhou, Changchun, Hefei, and Shenzhen) went into effect last June, offering up to 50,000 Yuan to every eligible plug-in hybrid and 60,000 Yuan to every eligible all-electric vehicle. Many cities have since announced similar or additional incentives. Yet, in the past one year few consumers have taken advantage of these measures, and charging posts are idling in the trial cities. From the 5 billion-Yuan subsidy fund earmarked for the program, no more than 100 million Yuan has been claimed.
In Shanghai, we learn, there are currently 10 registered electric cars in total, and only 2 of them are privately owned. Hangzhou, another test city, fares better, reporting 25 private EV purchases.
Zhen Zijian, an official from the Office of Green Vehicle Projects at the Ministry of Science and Technology, says about 10,000 "new energy" vehicles were sold in China last year, the vast majority of which went to government- and manufacturer-sponsored trial or showcase programs. He estimates that across the country there can be no more than 800 private owners of "new energy" cars.
According to The 2010 Report on China’s Auto Industry from the Ministry of Industry and Information Technology, 190 vehicle models from 54 manufacturers were included at the end of 2010 in the Catalog of Recommended Models for Green Vehicle Popularization Programs, and the production of these 190 models totaled only 7,181 units in 2010–that is less than 40 units for each.
One of the green cars recommended is the Joice HEV from Changan Auto, launched in 2009. Yet Changan decided to halt the production of it last year as there was hardly any demand. The F3DM from BYD has been on the market since late 2008. So far only 365 units of it have been delivered, and the company says it has no plan to increase production.
A recent survey shows that the top two reasons that consumers are unwilling to buy alternative-fuel vehicles are, non-surprisingly, high costs of purchase and maintenance and inconveniences in daily use, especially those of re-charging EVs.
Even after subsidies and incentives, most EVs currently available on the market cost lots more to buy than comparable conventional models. The all-electric Chery Riich M1 supermini, for instance, sells for about 70,000-80,000 Yuan after a 60,000 Yuan subsidy, which almost doubles the retail price of a M1 with a 1.0-liter gasoline engine.