Changes crucial to boost new energy car industry(2)

Big State-owned automobile enterprises' position in the two markets may be the reason why the government acts differently.

In the past 50 years, many Chinese automobile companies established joint ventures with foreign car manufacturers to learn advanced techniques. The result was that foreign players now dominate the Chinese auto market.

The government policies mean that electric cars from foreign companies are not eligible for subsidies, but those from joint venture companies are.

As a result, foreign companies tend to produce electric cars with local joint ventures, which is the "same route" as the development of fuel cars in China.

Industry insiders question whether Chinese companies will learn techniques through the electric vehicle joint venture process to help themselves grow competitively.

So far, the performance of Chinese automobile giants in the new energy industry has fallen flat. FAW's plug-in hybrid car Hongqi is still a concept and Dongfeng Motor Corporation has kept a low profile on new energy vehicles.

Private carmaker BYD is the only real "early bird" in the field.

"With central and local governments' strong support, China now has embraced the best environment for the growth of the new energy vehicle industry," said Hu Xiaoqing, PR and marketing director of Shenzhen BYD Daimler New Technology Co.

Emerging force

With State-owned big names showing lackluster performance in big- and medium-size cities, smaller brands have potential to enter the market, especially in small cities, townships and villages.

Most smaller brands offer low-speed electric cars, which run at speeds of less than 80 kilometers per hour and are sold for between 25,000 yuan ($3,997) to 50,000 yuan. Many electric motorcycle producers can also manufacture the cars.

Public security departments in many places do not issue plates to low-speed electric cars, as they do not consider them "real" vehicles.

However this could change after the government recognized low-speed electric cars as "normal" electric vehicles, in a draft standard for the industry in November.

Unlike big cities, small cities, townships and villages have plenty of land to build charging posts, which is an important foundation for the niche market ignored by many big enterprises.

Jia Xinguang, a Beijing-based independent industry analyst, said the government should focus more on promoting the sale and use of new energy automobiles in medium- and small-sized cities. "The subsidies in the smaller places are much lower than Beijing and Shanghai. They need more battery-charging stations and better after-sales service facilities," he said.

Learn from Germany

The German government's policies for new energy cars could provide inspiration for the Chinese government.

The German authority believes the development of electric cars should be a systemic plan that includes not only vehicles but also intelligent transportation and smart grids.

With this in mind it plans to create a new energy car environment, which will involve vehicles, city planning and an energy and industry chain.

Instead of subsidizing electric cars buyers, the German government financially backs companies in fields such as automobile manufacturing, energy and electric power to develop related products.