China to increase R&D support for electric vehicle industry

China is ready to shift its financial backing of the new-energy vehicle sector to supporting research and development efforts of its main automakers, rather than simply offering consumer discounts on vehicle purchases, a senior minister said on May 30.
In its efforts to increase the number of electric vehicles, or EVs, on its roads over the next five years, Wan Gang, minister of science and technology, said government subsidies are only “short-term solutions”, and that the industry can only be sustained and expanded by raising technology levels and lowering costs.
He said direct government incentives for consumers are likely to be phased out by 2020, if operational expenses can be lowered and the market expanded. He declined to comment on the possible renewal of subsidies on electric vehicles, which expired at the end of 2012.
Central government rebates of up to 60,000 yuan (US$9,682) used to be offered on the purchase price of battery-powered cars.
“The government is unwaveringly committed to the industry, but EV makers should never count on subsidies to survive,” Wan said at the 2013 International Forum on Electric Vehicle Pilot Cities and Industrial Development held in Shanghai May 30-31. He continued, “It is imperative (for companies) to enhance their core competence with research and innovation.”
A recent study by the United Nations Department of Economic and Social Affairs showed that China holds just 1% of total patent registrations for lithium ion batteries, a critical component of EVs, while Japan owns 52% and the U.S. 22%.
Local governments have also pledged to support the R&D of key EV technologies.
For instance, the Guangdong provincial government plans to invest more than 57 billion yuan (US$ 9.2 billion) into 66 key new energy projects between 2015 and 2020.
Wan praised the efforts of several local EV initiatives, including the unveiling of the Shanghai New Energy Vehicle Data Collection and Monitoring Center, which will be capable of real-time monitoring of 2,000 electric vehicles in the city to collect data on vehicle mileage, battery use and recharging station performance. The data will be collected via electronic terminals, which transmit information to the monitoring center by GPRS.
Around 80% of the cars linked to the system will cover less than 80 kilometers per day, according to statistics.
Wan said such information will be of great value for automakers and research institutions in the future as they develop new EV designs.
By the end of March 2013, China had around 39,800 electric vehicles on the road, 80% of which were used for public transport. Wan urged higher private use of EVs.
Joining Wan at the Shanghai event was Maria Van der Hoeven, executive director of the International Energy Agency, who said that about 160,000 EVs were sold globally last year, just 0.02% of the entire car market.
Despite an ambitious projection by the IEA that 90% of light-duty vehicles will be powered by electric motors by 2050, Van der Hoeven added that immediate demands are unlikely to be met due to supply shortage.
Various local governments in China have expressed an interest in supporting the electric vehicle industry and have rolled out their own incentives to lure customers. For example, the Shanghai municipal government offers a 40,000 yuan (US$6,455) rebate on the purchase of a battery-powered car.
Buyers in Shanghai’s Jiading district, which has positioned itself as an international EV pilot zone, can benefit from an additional cash rebate worth 15,000 yuan (US$2,421), a program available for two years, and district head Ma Chunlei said she hopes it will result in the sale of 350 EVs.
Shanghai’s new energy car market was worth 3.5 billion yuan (US$564.8 million) in 2012, according to Vice-Mayor Weng Tiehui.
About 300 Roewe E50 vehicles, China’s first indigenous purely electric super-mini car, have been ordered for private use, she noted.
Shanghai-based vehicle rental company eHi Car Service Co Ltd. has also embraced electric vehicles. Beginning in June it will add 500 Roewe E50s to its 10,000-vehicle Shanghai fleet.
(May 31, 2013)