Chinese look to new-energy cars amid incentives

With surging gas prices and new government incentives to back new-energy vehicles, Chinese people are showing greater interest in the fledgling sector.

China's State Council on Wednesday approved a development guideline for the energy-saving and new-energy car industry, a step conducive to easing pressure on natural resources and the environment.

Online posts and microblog accounts soon buzzed with speculation about how the new-energy vehicle sector will develop in the world's largest auto market.

A poll conducted by Sohu.com, a major Chinese web portal, indicated after the approval of the development guideline, 53.85 percent of participants would consider purchasing a new-energy vehicle if the government offers subsidies for buyers.

Around 36 percent said their decision would depend on the size of the subsidy, while just 10.33 percent completely ruled out the possibility of buying one, according to the poll.

Supporters say that owning a car that consumes little to no gasoline is becoming an increasingly enticing alternative, especially in light of surging gas prices.

China's gas prices are currently at a record high. The country has raised gasoline and diesel prices twice since the beginning of this year.

As of June 2010, China's central government has launched trial subsidy programs in five cities -- Shanghai, Changchun, Shenzhen, Hangzhou and Hefei. The program offers a subsidy of up to 60,000 yuan (9,523.2 U.S. dollars) to buyers of purely electric vehicles and 50,000 yuan to hybrid vehicle buyers.

Local governments will also offer subsidies. For instance, Shenzhen and Haikou are paying out 60,000 yuan in subsidies for each person who purchases an electric vehicle.

The government will expand the pilot program for subsidizing the private ownerhips of new-energy cars, according to a statement released Wednesday after a State Council executive meeting presided over by Premier Wen Jiabao.

The government also plans to build more battery-charging stations and create more facilities for recycling batteries.

It is hoped that China's accumulative output of electric and hybrid vehicles will reach 500,000 units by 2015 and 5 million by 2020, the statement said.

However, the sales volume of new-energy cars still represents just a tiny share of China's total car sales.

In the first quarter, sales of energy-saving and new-energy vehicles amounted to 10,202 units, just a fraction of the 4.79 million vehicles sold overall during the quarter, according to data from the China Association of Automobile Manufacturers (CAAM).

Results from the Sohu.com poll indicate that the top concerns about new-energy cars revolve around battery performance and lifespan, affordability and the availability of battery-charging facilities.

A statement issued by the State Council following their Wednesday underscored the necessity of requiring domestic manufacturers to become capable of independently producing state-of-the-art components for new-energy cars.

China should endeavor to make breakthroughs in developing key technology to significantly enhance fuel efficiency and battery safety, the statement said.

China overtook the United States to become the world's largest auto market in 2009. Chinese automobile manufacturers produced 13.79 million and sold 13.64 million motor vehicles that year.