Draft calls for changes to EV program

The Ministry of Finance and the Ministry of Industry and Information Technology, in conjunction with several other central policymaking bodies, have submitted a draft proposing amendments to the subsidy scheme which covers electric vehicle (EV) manufacturers on the Chinese mainland, the Securities Daily reported Wednesday.

The draft, which awaits review by the State Council, advocates expanding the scheme beyond its current geographic boundaries, allowing manufacturers to receive funding directly from central authorities rather than local governments and providing more financial support for infrastructure projects, according to the report.

News of this proposal comes as Tesla Motors' efforts to make inroads into China stir debate over earlier government moves to foster a domestic EV industry within the world's fastest growing car market.

"The slow growth rate in the EV industry in the past has been due to a lack of consumer demand. The full potential of the market has not yet been tapped," Liu Enqiao, a senior energy analyst with Beijing-based Anbound Consulting, said in an interview with the Global Times Wednesday.

Wang Chuanfu, the founder of BYD, one of China's largest manufacturers of EVs, reportedly said at the company's recent annual meeting that it could create cars like those offered by Tesla immediately if the market called for it.

According to Liu, technology and funding are not the biggest obstacles facing China's EV makers. Many of these manufacturers have long benefited from campaigns aimed at cultivating next-generation industries while planners work to restructure the country's economy.

"What the industry really needs is a star product that can gain the attention of customers and widen the market. Think of what a product like the iPhone did to move the smartphone market forward," Liu said.

In terms of volume, EVs account for a tiny fraction of China's automobile sales, yet recent growth results show EVs outpacing other segments of the car market. According to data compiled by the China Association of Automobile Manufacturers, 5,889 plug-in EVs were sold in China during the first half of 2013, up 42.7 percent year-on-year.

Robust growth, solid fundamentals and continued signs of government support have given many investors reason to be optimistic about EVs and related sectors, according to Wind.