Wednesday, June 9, 2010

How China encourage Green Car?

(Reuters) - China said on Tuesday that it would launch a pilot program in five cities to provide subsidies to buyers of electric and hybrid cars, as the government steps up efforts to cut emissions in the world's biggest auto market. Residents of Shanghai and Shenzhen, as well as Hangzhou and Hefei in the east of the country and Changchun in the northeast, would receive up to 50,000 yuan ($7,320) in subsidies if they buy plug-in hybrid cars, the Ministry of Finance said on its website.

The maximum subsidy for those who bought fully electric cars was 60,000 yuan, the ministry said. "The handouts could get people interested in green car models now that the government has come up with a concrete plan and real money to back it up," said Harry Zhao, an analyst with industry consultancy CSM Worldwide. "But it's unrealistic to expect it to work like magic; like tax incentives did last year." Beijing's tax incentives for small cars and subsidies for vehicle buyers in rural areas helped domestic vehicle sales surge 46 percent last year to 13.6 million units, surpassing the United States as the world's top auto market.

The impact of the new subsidies on green car sales was unlikely to be very large in the short term because of high battery costs and an inadequate charging network, but would make it easier for those interested in cars fueled by alternative energy to decide to buy such vehicles, analysts said.

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