Waning subsidies may dash China's EV sales expectations
Supportive policies including government subsidies and tax exemptions have helped to push up new energy car production and sales in China, which rose 161% (177,000 units) and 162% (170,000 units) respectively in H1 2016. However, China's Association of Automobile Manufacturers had predicted sales of 700,000 for 2016, hence there is some way to go to achieve that level. In addition, the country's supportive subsidies, which were introduced for green cars in 2010, have decreased since 2014 and while charging station numbers grew by 68% in the first half, infrastructure investment has failed to meet market expectations.

Subsidies drive new energy car sales in China

Favorable policies are driving new energy car sales in China.



Figures released by the China Association of Automobile Manufacturers (CAAM) show that green car production and sales reached 177,000 and 170,000 units in the first half of 2016, up 161 percent and 162 percent, respectively.



Of all these vehicles, pure electric vehicles (EV) have shown a particularly impressive performance, with production of 134,000 units, according to the association.



In Changchun, a northeastern city, green cars are already on the road. At the city's ongoing international expo, visitors crowded the green car booths to inquire about prices, subsidies and vehicle specifications.



"Currently, you don't have to pay taxes when you buy a new energy car in China," said Dai Dali, General Manager of China FAW New Energy Vehicle Branch.



One of the company's hybrid cars, which can run 50 km per charge, costs about 160,000 yuan (24,000 US dollars), saving about 14,000 yuan in tax.



"An ordinary fuel car costs about 0.7 yuan per km to run; a hybrid costs only about 0.4 yuan," Dai said.



In Changchun, more than 300 such hybrid EVs are running on the city's roads every day, he added.



Many home-grown brands are competing for a share of the market.



Guo Ai, regional representative of JAC Motors, said the company's new energy cars are "doing quite well" in cities like Beijing, where government subsidies help. A low-configured model costs a around 70,000 yuan.



Price is just one factor. In China, drivers complain about poor driving ranges and shortened battery life in winter.



"We are improving our technology to increase ranges, and improve cold weather performance," Guo said.



Chinese companies, including BYD and FAW, have or plan to introduce new EV models.



However problems remain with insufficient charging facilities and lower subsidies.



There were about 81,000 public charging stations in China at the end of June, up 65 percent compared to the end of last year. The number of private charging stations rose 12 percent from the end of 2015 to more than 50,000, according to the National Energy Administration. But investment is "small" and "lower than market expectations."



State Grid, the biggest investor, hosted two bidding sessions in the first half of this year, but drew a mere 1.4 billion yuan in investment, far lower than the 5 billion target.



The CAAM predicted 700,000 sales by the end of this year, but sales in H1 failed to reach one fourth of that target and government subsidies are on the wane.



China started subsidizing green cars in 2010, with up to 50,000 yuan for each hybrid and 60,000 yuan for a pure EV. The subsidies have gradually decreased since 2014.



Businesses are turning to making green SUVs, popular in China. FAW has begun producing an electric version of its Besturn X80, though it is unclear when it will be on the market.



Various media outlets have reported that eight domestic brands will release 10 types of electric SUVs in 2016, with most based on their fuel car models.

