Stimulus for new energy vehicles continues in city

• Source: Global Times
• [08:54 July 27 2010]
• Comments

A Shanghai-based new energy automaker promotes its products at an auto show. Photo: CFP

By Zhou Mi

Shanghai's government is allocating more capital to the development and promotion of new energy vehicles, although sales of the vehicles in the city remain poor.

The local government signed an agreement with State Grid Corporation of China (SGCC), the national electricity supplier, to enhance the city's infrastructure to support electric-powered vehicles.

Under the agreement, the Shanghai government is obliged to give SGCC preferential treatment regarding land, utilities and operations, and SGCC will build seven charging stations and 360 smaller charging points for electric vehicles by the end of the year.

The move is in line with the national strategy to encourage sales of new energy vehicles, which includes subsidies of up to 60,000 yuan ($8,850) for manufacturers for each qualifying new energy vehicle, including electric and hybrid vehicles, sold from June 1.

However, the policy has yet to ignite the market. According to Liu Jianhua, director of Shanghai New Energy Vehicle Development Office under Shanghai Municipal Commission of Economy and Informatization, no new energy cars have been sold in the city since the subsidies came into effect, China Business News reported last week.

The problem is partly due to only three car models - two from Shenzhen-based BYD and one from Shanghai-based Zotye - currently meeting the criteria for subsidies.

"It will take a long time for consumers to buy into the idea of new energy vehicles," Li Shengmao, new energy indus-try analyst from China Investment Consulting, told the Global Times Monday. "However, it is right for the government to continue investing in the area, as this is what many countries with more established new energy industries, such as France and Japan, had to go through."

Li also predicted that operating the charging stations for electric vehicles will bring enormous profits to SGCC, as will owners of electric vehicles who charge their vehicles from their home mains supply.

Liu Junfeng, a Shanghai resident who is considering buying a car, told the Global Times Monday that he would not buy any kind of new energy vehicle. "It is not worth buying a new energy car at present, even with the subsidies, as there are not enough charging stations, and the cars still cost a lot," he said.

Shanghai is planning its own subsidies to supplement the national ones, although details have yet to emerge. According to Li, the local rules will include compensating SGCC for early losses incurred as it builds the charging station infrastructure. However, he denied rumors of a subsidy exempting buyers of new energy vehicles from having to pay for car registration in the city.