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Electric car surge

2014-07-11 10:31 Global Times Web Editor: Qin Dexing

Automakers seek to tackle consumers' reluctance

With electric vehicles becoming the new focus of bilateral governmental cooperation, there is every indication that the development of the electric-car sector in China is about to enter the fast lane.

The Chinese government Wednesday decided to wave the purchase tax for new-energy vehicles, in a bid to boost new-energy car sales.

Imported electric cars are also subject to the supporting policy.

The policy came one day after the Sino-German Electric Vehicle Charging Project kicked off in Beijing's Tsinghua University. German Chancellor Angela Merkel and China's Minister of Industry and Information Technology Miao Wei attended the launching ceremony, calling for bilateral cooperation in setting up standards for charging facilities.

The project will see the participation of major automakers from both countries including BMW, Volkswagen, Daimler, BAIC Motor Corp and BYD. And the two countries will continue to discuss cooperation in the electric-car sector during the third round of Sino-German Government Consultations in October, China Securities Journal reported Tuesday.

"Unified standards between China and Germany will be particularly favorable for German automakers, as China represents a big market for them," Beijing-based independent industry watcher Zhang Zhiyong told the Global Times on Tuesday, adding that clear industry standards may bring a major breakthrough for the electric-car market.

  Lack of infrastructure

Gao Jian, an industry analyst at Shanghai-based consultancy LMC Automotive, said that the new-energy vehicle sector will be greatly boosted by the surge of government support in the sector.

But there are still no clear policies guiding the construction of personal charging facilities. "It is unlikely that people will buy electric cars if this issue is not dealt with," he said.

Electric car-related stocks on the mainland market have surged in the past few days, but the Sino-German cooperation is not the only thing giving people a reason to feel upbeat about the future of electric vehicles.

During President Xi Jinping's visit to South Korea on July 3 and 4, South Korea's LG Chem Ltd signed an agreement with the local government of Nanjing, East China's Jiangsu Province, to build a car battery plant in a development zone in the city.

The plant, with a total investment of $3.5 billion, is slated to break ground at the end of this month.

Recent media reports, however, suggest that the market may open even further to non-automakers after government-backed China Automotive Technology and Research Center drafted a plan in this regard that is expected to receive approval by the end of this year.

Sales of new-electric vehicles (NEVs), including pure electric vehicles and hybrids, are expected to total 100,000 units in China this year, according to Ouyang Minggao, a Tsinghua professor who attended the event on Tuesday.

But the latest statistics show that a great deal of effort will be required to reach this target. In the first quarter of this year, China only sold 6,853 units of NEVs, up 120 percent year-on-year, data from the Ministry of Industry and Information Technology showed in April.

  Doubts remain

It is clear that the auto sector is leaping toward a cleaner future given the country's increasing urgency in fighting air pollution.

Traditional industry leaders have all shown an interest in tapping into the NEV sector.

German carmaker BMW's i3 pure-electric model and its i8 plug-in hybrid model are expected to hit the Chinese market in September this year. BYD's Denza electric-car brand, which was developed with Daimler, is set to hit the market in the same month.

Volkswagen will also introduce its electric-up! model to China this year. "Our priority, however, [in the NEV sector] will be plug-in hybrids," Jochem Heizmann, CEO of Volkswagen Group China, told the Global Times in an interview on Saturday, citing concerns over the undeveloped charging infrastructure.

Despite the government and industry's push to develop the sector, consumers are still reluctant to give it a try.

"Traditional gasoline vehicles are my first choice. I may consider those hybrids, but for now I think I will pass on pure electric," Li Shanshan, a 29-year-old white-collar worker at an IT company in Beijing, told the Global Times Tuesday.

Gao agrees that there will be a transitional period. "This transition doesn't mean that pure electric-cars are totally unwanted now. Some second-car buyers may want to try pure-electric cars."

US premium electric-car maker Tesla has drawn a great deal of attention in China and has become a popular toy for the country's growing number of rich people. But a recent picture featuring a Tesla with a dead battery being pushed along the street has been widely circulated on China's social media.

"The Tesla case shows that China is still not ready for a pure electric era," Gao said, noting that the lack of charging facilities as opposed to an immature battery technology, is the biggest obstacle hindering the development of the sector.

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