Policy shift will jolt new-energy vehicle market

China is increasing the number of new-energy vehicles in government and public institutions' fleets in order to boost their widespread use.

These cars should account for at least 10 percent of all newly purchased ones in 2014, 20 percent in 2015 and 30 percent in 2016, according to a plan the National Government Offices Administration published on its website on Sunday.

The plan says the percentage will grow each year later. It sets a higher ratio - 15 percent for this year - for the Beijing-Tianjin-Hebei region, and Yangtze River Delta and Pearl River Delta regions to alleviate air pollution.

New-energy vehicles include fully electric cars, plug-in hybrids and those powered by fuel cells.

The plan says that charging stations' low numbers are frequently mentioned as the reason for low public enthusiasm for new-energy vehicles. It says that the number of charging slots should not be less than the number of new-energy vehicles. It also stipulates that any newly built government or public institution parking lot should be equipped with charging facilities for new-energy vehicles.

To achieve that goal, private capital has been invited to play a larger role in beefing up China's charging network.

The plan is the latest effort to boost such vehicles' popularity after the State Council decided to exempt them from the purchase tax, which currently stands at 10 percent, from Sept 1 to the end of 2017.

The wave of favorable policies is intended to boost sales, said John Zeng, an analyst at Shanghai-based consulting firm LMC Automotive, but he worried that protectionism might be involved in government purchases of new-energy vehicles.

"The market is still very small, and if local governments protect local brands, the market will become even further fragmented," he said.

Zeng also urged Chinese automakers to make greater efforts to come up with competitive models.

"Otherwise, they run the risk of being conquered by overseas brands, as in the conventional vehicle market, when the favorable policies expire years later."

Statistics from the China Association of Automobile Manufacturers show that 20,692 new-energy vehicles were produced and 20,477 sold in the first half of the year, more than double the figure from the same period last year.

Shares of BYD Co, the electric automaker partially owned by Warren Buffett's Berkshire Hathaway Inc, climbed 4.1 percent in Shenzhen and Hong Kong.

Ouyang Minggao, a professor at Tsinghua University and head of the nation's energy-saving and new-energy vehicle program, said sales could hit 100,000 units in 2014 as several new models are set to arrive by year's end.