The Chinese government announced last week that it plans to invest up to $14.8 billion (100 billion yuan) over the next ten years to stimulate the production of plug-in hybrid and all-electric cars. The country intends to have 5 million of these vehicles on the road by 2020. That kind of commitment makes the $5 billion that the U.S. government plans to spend in this direction appear as a paltry sum.
How will China disperse those funds and why is China moving so aggressively in the electric vehicle space?
It appears that the Chinese government adopted the U.S. policy model for distributing funds to their emerging domestic electric car industry. They plan to divide the 100 billion yuan between the development and commercialization of fuel-efficient powertrains (50 billion), demonstration programs (30 billion), and creating a charging infrastructure (5 billion). They plan to provide funding to 3-5 vehicle manufacturers and 2-3 battery and electric motor suppliers.
In addition, consumers of hybrid and plug-in vehicles in five Chinese cities will benefit from significant state subsidies. Those that buy plug-in vehicles (plug-in hybrid and all-electric) will qualify for the highest purchase subsidies.
As it stands right now, China’s automakers lag the world in the development of gasoline and diesel engines. Developing an advanced electric vehicle industry is a way to leapfrog their way forward in the global automotive industry, according to Karl-Friedrich Stracke, GM’s vice president of global vehicle engineering,
Considering that the Chinese consumer market for automobiles now outstrips the U.S. market, I am glad their government has recognized the strategic role they can play in expanding the production of plug-in vehicles. With mass manufacturing of plug-in vehicles and components in China, perhaps we will benefit from greater economies of scale that will drive prices down in the U.S. as well.
Shannon Arvizu, Ph.D., is a policy and communications strategist in the clean tech transportation field. Learn more at www.MissElectric.com.