The Chinese government will invest hundreds of billions of yuan in new energy vehicles, giving priority to Chinese companies.
According to a report in the Nikkei Asian Review on August 17, the Chinese government has clearly stated its policy of investing hundreds of billions of yuan by 2020 to support the development of the new energy vehicle industry, with electric vehicles (EVs) at its core. Through government financial support, priority will be given to Chinese companies, aiming to achieve the goal of popularizing 5 million new energy vehicles by 2020. However, a problem also exists: the electricity supply supporting the popularization of electric vehicles will still rely heavily on coal-fired power generation. Therefore, the effects of this investment as a countermeasure against global warming will be diminished by the negative impact of coal-fired power generation.
China's Ministry of Industry and Information Technology has drafted a "Development Plan for New Energy Vehicles and Energy-Saving Vehicles" and entered the final stage of coordination with relevant departments. The draft plan identifies electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) that can be charged using household power as the core of the new energy vehicle sector. Influenced by this Chinese government policy, major state-owned enterprises in China will soon establish an "Electric Vehicle Industry Alliance." It is expected that 16 companies will participate, including major automakers such as FAW Group (Jilin Province) and energy companies such as Sinopec, which intends to engage in battery development and build charging stations. An outline of the alliance's establishment will be released on August 18.
Of the 100 billion yuan investment, the Chinese government will allocate approximately two-thirds, or 65 billion yuan, before 2015. Of this, 30 billion yuan is expected to be used to support EV manufacturers in their development and to subsidize vehicle purchases; 5 billion yuan will be used for the construction of charging stations; and 10 billion yuan will be used to support manufacturers of core components such as motors and batteries. In addition, the Chinese government will invest 20 billion yuan in the development and purchase subsidies for energy-saving vehicles, primarily hybrid electric vehicles (HVs). The goal in this area is to manufacture and sell 15 million vehicles by 2020. Support is expected to primarily target Chinese manufacturers.
In addition to technology promotion measures, the plan also includes consumer-oriented policies such as tax reductions on vehicle purchases. China's auto market, which sold over 13 million vehicles last year, becoming the world's largest for the first time, is expected to see further growth. Of the 100 billion yuan in support funds, the remaining approximately one-third will be determined based on the actual situation in 2015.
China's push for EV development is driven by the Ministry of Industry and Information Technology's vision of "building global enterprises." "Although we lag behind experienced overseas companies in conventional engine vehicles and HVs, we are poised to surpass them in the EV field, where competition is just beginning," Zhao Qingjie, chairman of Wande Automotive Technology (Liaoning Province), a major Chinese auto parts manufacturer, told reporters.
Another factor is the consideration of ensuring energy security. In the early 2000s, China's crude oil self-sufficiency rate exceeded 70%, but by 2009 it had fallen below 50%. An official from China's National Energy Administration, which aims to restore it to 50%, stated: "If the number of gasoline-powered cars increases, the dependence on overseas crude oil will rise. It's best to increase the number of cars that can meet demand through thermal power generation utilizing abundant coal resources."
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However, using coal for power generation will significantly increase greenhouse gas emissions. To reduce greenhouse gas emissions, China urgently needs to adjust its power supply system and expand the scale of nuclear power generation, among other things.
–Source: TechOnline
