China To Subsidize Green Rides For Consumers, Public Transit

December 11, 2009
The Great Wall of China

The Great Wall of China

China is in a curious position. Its auto market is very big, and it's positioned to get much, much bigger, but the Chinese government doesn't want the country's automakers to move down the traditional path of combustion-engine vehicles. Rather, it wants to grow an indigenous green vehicle industry.

Some of China's desire might be attributed to the state of the country's environment, which is notoriously polluted from China's little-regulated industrial production. But the more likely rationale behind China's plans is that the government has identified hybrids as EVs as the future of automotive travel, and China wants to position its manufacturers at the forefront of that technological shift.

In some ways China may have an easier time of going green than other countries with longstanding auto industries and car-driving consumers like the U.S. Moving American drivers and automakers toward the green end of the scale is a bit like making a left turn in a cruise ship: slow and somewhat treacherous. China, on the other hand, has the opportunity to plan ahead and move its industry down the green path right from the start (or at least from earlier in the development timeline).

For China to pull that off, however, both car buyers and automakers will need support from the government, and now that support seems to be coming in the form of incentives. This week, the Chinese government stated that it would hand out rebates to individual car buyers -- a first for the country. The government also agreed to subsidize the purchase of green vehicles for public transport fleets in up to 20 cities across the country. Those subsidies -- which could run up to 600,000 yuan ($87,880) for large buses -- are designed to cover the cost difference between conventional combustion-engined rides and their electrid, hybrid, or fuel-cell equivalent.

Not much detail about the consumer program was given on the government website where these announcements were made. However, we expect something on-par with Cash-for-Clunkers, but with a somewhat longer timetable. We'll keep you posted.

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