China to pay subsidies for EVs, plug-in hybrids

China has begun paying subsidies of up to 60,000 yuan ($8,784) a car to manufacturers of electric and hybrid vehicles on a trial basis in five cities, the Ministry of Finance said Tuesday.

Separately, private buyers of such cars can get a 3,000 yuan ($440) subsidy from dealers, the ministry said in a notice on its Web site.

The subsidies for purchases by private buyers are being paid to manufacturers to “help promote faster technological innovation of automotive technology,” it said.

Pure electric vehicles have so far mainly been used in China only for demonstration purposes or in government and corporate fleets. Manufacturers have long lobbied for government help in defraying the higher costs for such vehicles until sales are large enough in scale to bring production costs down to more manageable levels.

Plans for such subsidies were delayed, however, by conflicts over a policy that some believe favors relatively affluent car buyers over other Chinese whose travel by bicycle or public transport helps to minimize auto emissions.

Paying the larger subsidies to manufacturers may have helped make the plan more politically palatable.

The subsidies of 3,000 yuan ($440) per kilowatt hour of battery power, or up to a maximum 50,000 yuan ($7,320) for plug-in hybrid cars and up to 60,000 yuan for pure electric cars, will be paid in five cities: Shanghai, Changchun, Shenzhen, Hangzhou and Hefei.

The cities are locations of headquarters for major automakers.

Shanghai Automotive Industrial Corp. is a partner of General Motors Co. and Volkswagen AG. Changchun is the base for FAW Group, another big state-owned automaker. Shenzhen is home to BYD Auto, a leader in electric vehicle development, while Hangzhou is the base of Zhejiang Geely Holding Group, which recently purchased Sweden’s Volvo Cars from Ford Motor Co. Hefei is the provincial capital of Anhui, where automaker Chery Automobile is based.

The trial subsidy program also requires local governments in participating cities to supply necessary infrastructure to support wider use of electric and hybrid vehicles, including charging stations and systems to recycle potentially highly polluting used batteries, the ministry’s notice said.

Associated Press