BEIJING (Bloomberg) -- China may subsidize purchases of at least 4 million units of energy-efficient vehicles by 2012, the National Development and Reform Commission, China's top economic planner, said.
China, the world's biggest polluter, plans to subsidize purchases of hybrid and electric vehicles to help cut emissions, potentially increasing sales of green cars by more than 400 billion yuan ($59 billion), the government said.
Automakers including Toyota Motor Corp., General Motors Co., Volkswagen AG and Warren Buffett-backed BYD Co. plan to boost output of hybrid and electric vehicles to meet demand in the world's biggest car market.
Buyers of certain hybrid models, powered partly by gasoline or diesel, will get a 3,000-yuan subsidy for their purchase, the Ministry of Finance said on May 26.
“Subsidies are generally useful in promoting alternate fuels,” said Vivek Vaidya, automotive and transportation director at market researcher Frost & Sullivan. “China also sees electric vehicles as an opportunity to leapfrog developed countries in technology areas. Hence, would definitely promote EVs and plug-in vehicles in China.”
On a trial basis, China is giving out as much as 50,000 yuan toward the purchase of plug-in hybrid models and up to 60,000 yuan for vehicles that run only on batteries in the cities of Shanghai, Changchun, Shenzhen, Hangzhou and Hefei.
A lack of affordability has limited sales. BYD, a Shenzhen-based carmaker 10 percent owned by Buffett's Berkshire Hathaway Inc., delivered 48 of its F3DM plug-in hybrids in 2009 at 149,800 yuan apiece. It sold 290,963 of the gasoline-powered F3, which starts at 59,800 yuan.
Toyota sold 271 of its 259,800-yuan Prius cars in China last year, according to the China Association of Automobile Manufacturers. Passenger car sales in the nation totaled 10.3 million in 2009.
China must limit its energy consumption to 4.5 billion metric tons of coal equivalent by 2020 to meet its carbon intensity goal, Dan Yande, deputy energy research director at the NDRC, said at a conference in Shanghai.
The government is promoting clean and efficient energy use to help meet a 2020 target of reducing carbon dioxide emissions per unit of economic output by 40 to 45 percent from 2005 levels.
The increase in sulfur-dioxide emissions in the first quarter “has raised alarm bells with the environmental protection authority,” Environmental Vice Minister Zhang Lijun said in a televised press conference in Beijing Wednesday.
“This was caused by an excess capacity in resource-based industries, a severe drought in the southwest of the country and some slackness in the environmental awareness of local governments and companies,” he said.
China's air quality has improved significantly from 2005, Zhang said. Still, the country faces severe environmental challenges, mainly in the amount of acid rain received in small cities and pollution along coastal regions, he said.
The government shuttered 231 heavy-metal polluters and forced 641 companies to cease their operations last year, the minister said.