China’s Government to Purchase Electric Cars

China unveiled a plan on Sunday encouraging government organs to buy more new energy vehicles, which has been hailed as a move to fight pollution and drive the growing new energy car market.

From 2014 to 2016, new energy vehicles will account for no less than 30 percent of newly purchased cars in state organs every year, according to the plan jointly released by the National Government Offices Administration (NGOA), the National Development and Reform Commission, the Ministry of Finance, the Ministry of Science and Technology, and the Ministry of Industry and Information Technology.

The plan also applies to government organs and public institutions in regions where controlling small particle emissions has become a challenging task in the fight against pollution, an NGOA spokesman said.

The number of new energy vehicles will account for at least 15 percent of new cars in 2014 for local government departments and public institutions in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Pearl River Delta.

The percentage will be raised year by year in government organs, public institutions and organizations that are wholly or partially supported by government funds, according to the spokesman.

To implement the plan, the central government promised to offer subsidies for new energy vehicles priced less than 180,000 yuan (29,000 U.S. dollars) after taking into account of the subsidies, and ordered local governments to build more facilities for the use of new energy vehicles.

The ratio of charging interfaces to new energy vehicles should be no less than 1:1. Government organs and public institutions will add new energy vehicle-only parking space. Preferential policies will be introduced in the car plate lottery and car purchase quota in favor of new energy vehicles, according to the plan.

The plan is the second stimulus in a week to popularize the use of new energy vehicles.

On Wednesday, the Chinese government announced that new energy cars will be exempted from a 10-percent purchase tax starting from Sept. 1, 2014 to the end of 2017 in its bid to save energy and combat pollution.

Under Sunday’s plan, government bodies will be motivated to buy more new energy vehicles, ownership of which has been limited despite the government’s longtime promotion, said an official in charge of the assets management bureau of the NGOA, who requested anonymity.

As early as January 2009, four government ministries began to promote energy-saving and new energy vehicles in 13 Chinese cities including Beijing. In 2010, another 12 cities were included, most of which were located in the eastern and central part of the country, where industry is more developed and energy conservation and emission reduction tasks are heavy.

In 2013, the State Council, China’s cabinet, published a five-year roadmap for the development of the energy industry from 2011 to 2015.

According to the roadmap, China will “provide necessary conditions and support” for the development of the new energy vehicle industry. It said the country plans to finish a network that could provide charging services for half a million electric cars by 2015.

Thanks to government promotion, new energy vehicle manufacturers have mushroomed in China. Currently, 97 Chinese enterprises are capable of producing new energy vehicles, and 628 car models from these companies have made their entry to a government recommendation catalog.

However, the number of new energy vehicles sold is small.

In the first half of 2014, new energy vehicles, including pure electric and hybrid electric cars, posted two-fold growth year on year both in output and wholesale sales to reach 20,692 units and 20,477 units, respectively. Despite robust growth, the number of new energy vehicles sold accounted for less than 0.2 percent of the nearly 11.7 million vehicles sold in the same period.

Consumers have complained of poor infrastructure, such as difficult access to charging services, despite prices of new energy vehicles that appear attractive.

In Beijing, for example, buyers only have to pay about 120,000 yuan for the 220,000-yuan E150EV model, a pure electric car produced by the Beijing Automobile Works Co. Ltd.(BAW), after deducting taxes and other subsidies. But drivers have found it is as difficult to find charging facilities as it is to find a parking lot in the city jammed with 5.5 million cars.

Hu Enping, a public relations executive of BAW’s new energy car division, is optimistic about the impact of the new plan.

He said the new plan will boost consumers’ confidence in using new energy cars.

“Most consumers now worry about new energy vehicles’ technological stability, mileage, and charging services. If the government starts to buy more cars, it means those aspects have been greatly improved,” he said.