Thursday, July 1, 2010

China Subsidizes Electric Cars, But Small Efficient Gas Cars Too


BYD F0 is one of 71 China-market vehicles qualifying for a newly approved fuel-efficiency subsidy from the Chinese government.

Earlier this year, China announced hefty incentives for purchases of electric vehicles and plug-in hybrids: about $8,800 for full battery electrics and $7,300 for plug-in hybrids. That�"s a step up from the U.S. subsidy for electric cars, a tax credit worth $7,500 for cars (like the Chevy Volt) with at least 16-kilowatt hours of battery storage. China is providing the incentives to help reach its aggressive goal of 500,000 hybrids and electric cars by 2011.

As we recently reported, more expensive hybrid and electrics face serious economic challenges in the Chinese auto market�which last year became the largest in the world. Even with a $7,350 incentive, the BYD F3DM plug-in hybrid is about $6,000 more than the conventional F3 sedan�which sells for $8,750.

In a tacit acknowledgment that the jump to hybrids and EVs may be a big step for many Chinese car buyers, the government incentives announced today go way beyond hybrids and electric cars. They include 71 different fuel-efficient vehicles.

Whereas new U.S. incentives are based on the size of batteries, China is granting incentives�about $450 per car�to vehicles with an engine capacity of less than 1.6 liters that reduces fuel consumption by at least 20 percent. Sixteen Chinese automakers have cars that qualify. (Although Edmunds reported that some carmakers, even those that were awarded subsidies, weren�"t sure about the criteria.)

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