China has finally revealed its worst kept secret and announced a pilot program for five Chinese cities. It’s raining cash for buyers of electric vehicles and plug-in hybrids. And it “reflects Beijing’s resolve to foster domestic brands,” says Reuters.
Really? At first glance, there is no discrimination against laowei cars.
In the cities of Shanghai, Changchun, Shenzhen, Hangzhou and Hefei (Beijing notably missing) subsidies of up to 60,000 yuan ($8,784) go to buyers of pure electric vehicles, says China Daily. Buyers of plug-in hybrid cars will receive up to 50,000 yuan ($7321).
Buyers of hybrids? They get a handout of 3,000 yuan ($440) says China’s Ministry of Finance on their website.
This has Klaus Paur, director at TNS’s North Asia spin the yarn that “the Chinese car manufacturers are the main target for the subsidies and they should be the main beneficiaries.” Except that there aren’t many to participate in the boondoggle.
Reuters sees BYD’s elusive F3DM plug-in hybrid as the car that gets the money. The subsidy translates into a nearly 30 percent discount to the MSRP of 169,800 yuan ($24,870). It needs all the help it can get. It saw only 48 fleet sales last year.
Government money would also eventually benefit indigenous auto makers with electric or plug-in hybrids in the works. When they finally get to releasing them.
Reuters sees a bias against foreign car makers like Toyota, which have hybrids without a plug. The Prius sure could use a charge in China. While being the top-seller in Japan, in China its sales are mediocre.
Not letting facts get in the way of a good conspiracy, Reuters complains that “Beijing did not specify whether imported green cars like General Motors’ plug-in hybrid Chevy Volt and Nissan’s fully electric Leaf are eligible for the rebates.” Well, they are. The Finance Ministry doesn’t rule them out. (Some Chinese needed.)
The Wall Street Journal sees even darker clouds, people might riot: “Already, the move provoked resentful comments from some ordinary Chinese who question why the government is using public funds to subsidize car purchases for wealthy buyers. The issue is particularly sensitive in China, where social tensions are running high over a widening gap between rich and poor.”
Speaking of darker clouds, the Hybridcarblog has fundamental issues: “China derives 83 percent of it’s electricity from coal.”
Local observers think it’s much ado about nothing. “Price is not the only reason that keeps people from adopting EVs today. The infrastructure and the drive range are some of the other critical issues for people to think about,” said Raymond Tsang, partner at Bain & Co. Mr. Tsang seems to be the only one who has his head screwed on tight in this matter. My personal projection: The Chinese government is so generous with the subsidies, because it will be one of the cheapest stimulus programs: No takers.