Infrastructure snag to deter China's green car buyers

Lack of charging stations to upset mainland plan, despite subsidies for buyers, say analysts

PUBLISHED : Tuesday, 11 February, 2014, 1:57am
UPDATED : Tuesday, 11 February, 2014, 1:57am

The mainland government's move to ease pollution by giving more subsidies for the purchase of electric vehicles than it planned will run into a roadblock because inadequate infrastructure will deter potential buyers, analysts said.

Despite the government's efforts to promote the use of green vehicles given the worsening pollution problem, electric cars were unlikely to replace petrol-powered cars or trucks in the country, said Gordon Xie, a partner with Deloitte China who advises the car industry.

"The government's subsidies programme will encourage more drivers to accept electric vehicles in this early adoption period, but the infrastructure is not mature enough to attract buyers," Xie said.

The lack of charging stations had been a problem that made driving an electric car inconvenient, he said. "Drivers are willing to be more environment-friendly, but if it brings trouble in driving, they will hesitate."

John Zeng, a director at consultancy LMC Automotive, said local protectionism was another hurdle for promoting the use of electric vehicles as some local governments placed curbs on the purchase of electric cars produced by particular carmakers.

"Local protectionism has limited the growth in electric car sales. While the market is not yet well-developed, carmakers have lower incentive to invest in building more facilities like charging stations," Zeng said.

The finance ministry said in a joint statement with other ministries at the weekend that subsidies for the purchase of electric vehicles this year would be reduced by 5 per cent, although the reduction in subsidies was previously set at 10 per cent.

Next year's subsidies will be cut by a further 10 per cent instead of 20 per cent.

The government has pledged support for green cars even after the current subsidy programme expires next year.

The authorities announced a renewed green cars programme in September last year, offering buyers subsidies of up to 60,000 yuan (HK$76,700) for all-electric cars and 35,000 yuan for plug-in hybrid cars with an electric driving range of more than 50 kilometres.

The subsidy for electric buses is 500,000 yuan.

Shares of electric car and rechargeable battery maker BYD rose 4.58 per cent to close at HK$39.95 yesterday, shrugging off a 0.27 per cent drop in the benchmark Hang Seng Index.

Trading in Zhongtong Bus, a Shenzhen-listed electric bus maker, was suspended after rising 10 per cent yesterday.