June 21st, 2011 | Caixin Closer Look: The Grass is Not Greener in Alternative Cars
Beijing policymakers have been saying the time is nigh for new energy cars – but all these subsidies and incentives may result in naught given the hidden costs for consumers
The Beijing city government has said it will soon introduce policies to promote the sale of alternative energy cars, but these measures are simply wishful thinking on behalf of policy makers.
In addition to cash subsidies from the government, industry insiders said that prospective buyers of new energy cars will not need to take part in the highly-competitive lottery for car licenses, introduced earlier this year to ease worsening traffic and pollution in the capital city.
The lottery has done little to quell the love of cars, and the odds of winning a license plate through the draw rose was narrowed to one thirtieth in May.
The new policies, if implemented, will hold some allure to potential buyers in Beijing looking to sidestep the lottery. But sales of such vehicles aren’t likely to receive a strong push from this factor alone.
Alternative energy-driven cars are still distant second-choices among consumers, mainly due to comparisons on convenience and technological efficiency.
Some industry analysts have estimated that it will take 20 years before new energy vehicles can become commercially viable in China.
Moreover, these doubts over alternative-energy vehicles are only reinforced by the spate of safety scandals surrounding these cars. In April, A Chinese-made electric taxi caught fire with passengers onboard in Hangzhou city. The cause of the accident has not been released to the public.
Convenience is another reason customers stay away from new energy cars. There are not enough charging stations in China and the vast majority of Chinese families cannot afford a garage to recharge their vehicle at home.
Even with subsidies, new energy vehicles are still more expensive than conventional ones. For example, after factoring in subsidies from both central and local governments, the F3DM, a plug-in hybrid compact sedan manufactured by domestic BYD Auto, is priced at 88,000 yuan each, still 30,000 more expensive than the company’s gas-driven F3 model.
That helps to explain the lackluster sales of new energy cars in China over the past two years despite a slew of policy incentives.
In last June, the central government earmarked 5 billion yuan in budget to subsidize green car purchases. But less than 100 million yuan has been granted to about 10,000 such vehicles so far, according to media reports.
By staff reporter Liang Dongmei