Source: China Daily

04-20-2009 11:02

China's campaign to bring cleaner, low-emission vehicles to its roads may take a back seat as the government first tries to stimulate growth and counter dwindling sales in the world's largest car market.

Battery and car maker BYD Ltd and other Chinese auto manufacturers with ambitions to be among the first to globally market all-electric vehicles are pinning their hopes on regulatory support to spur demand.

But creating an emission-free vehicle market is unlikely to be a priority for China. While China has made much progress in setting standards regulating vehicle emissions, it has not gone as far as providing incentives for individual buyers of the expensive but low-polluting cars.

"I hope government subsidies can help boost demand, because this is good technology, though expensive compared to conventional cars," Henry Li, general manager for BYD's auto unit, said in an interview at the firm's Shenzhen headquarters.

China, the fastest growing major market for vehicles, is also the world's largest emitter of greenhouse gases.

Car sales growth in China, which overtook the United States in January to become the world's largest auto market, slowed to a single-digit rate in 2008 for the first time in at least 10 years as consumer confidence waned in a slowing economy, spurring government steps to bolster demand.

Beijing unveiled a raft of policies in January to lure buyers back into showrooms, including halving the auto purchase tax for cars with engine sizes below 1.6 liters. The government also scrapped some road fees and offered subsidies for farmers to boost demand for fuel-efficient vehicles in rural areas.

But given the high cost of developing hybrid and all-electric cars, automakers require more than the lifting of road fees and tax breaks to stimulate demand, experts said.

"There should be some incentives in place to convince consumers to switch to electric cars," said Sinling Chung, chief executive officer of Hong Kong-based EuAuto Technology Ltd, which recently began marketing a China-made microcar in Europe.

"There is also the issue of infrastructure. At some point car owners will need juice points where they can park and plug in the cars," said Chung in an interview at EuAuto's Shenzhen plant.

EuAuto plans to sell its two-door micro cars in China within three years, but has turned first to Europe, where subsidies for consumers help drive demand for electric cars.