China’s government will shift its financial support of the electronic vehicle niche market and pump more resources into research and development, the Minister of Science and Technology said on Friday.
Beijing is getting savvy about the global auto market, a market it now dominates in terms of number of cars sold. It now wants to be a market leader in lithium battery production and innovation. It also wants to see one of its myriad car companies become the next Tesla, or at the very least, follow in the footsteps of the Korean automakers Hyundai and KIA.
The government has been a staunch supporter of electric vehicles, providing production subsidies, land and low interest loans to auto makers like BYD , an EV maker that even Warren Buffet invests in. (Or did).
The government wants to increase the number of EVs on the road in China over the next five years, said Wan Gang, minister of science and technology, adding that government subsidies are only “short-term solutions”. It is likely that the pure EVs driving up and down the city streets of Shanghai will be made in China, and probably BYDs. China Daily reported Wan saying that the industry can only be sustained and expanded by raising their technology levels and lowering costs so consumers can actually afford the cars in the first place.
Wan said direct government incentives for consumers are likely to be phased out by 2020, providing operational expenses can be lowered and the market for EVs can be expanded. Beijing currently rebates of up to 60,000 yuan (or $9,790) towards the purchase price of battery-powered cars.
“The government is unwaveringly committed to the industry, but EV makers should never count on subsidies to survive,” Wan said on the sidelines of the 2013 International Forum on Electric Vehicle Pilot Cities and Industrial Development in Shanghai on Thursday and Friday. “It is imperative (for companies) to enhance their core competence with research and innovation.”
China still running ahead of the United States in terms of cars sold.
Over the last six months, EV cars have made news when Tesla sales surpassed that of the country’s first EV, the Chevrolet Volt. Although not a pure EV like the Tesla models and Nissan Leaf, it is powered moreso by battery and electric engine technology than are the popular hybrids like the Toyota Prius, which have a larger gasoline engine than the Volt. When Tesla sales beat the Volt recently, share prices skyrocketed. But over the last six months, Tesla shares have tracked BYD, China’s biggest EV maker.
In fact, BYD (HKG: 0285) is up 168% since December 3 and Tesla is up 189%. Year-to-date ending May 31 has BYD also trading like Tesla, up 143% while Tesla is beating it, up 188%.
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