Subsidies for "New Energy" Vehicle Buyers in China

Just the Facts:

• People in China who buy "green" vehicles could get a government subsidy.
• The government is considering a 6,000 yuan ($8,800) payment.
• China wants to have 500,000 green cars on the streets within three years.

SHANGHAI, China — China is considering offering a subsidy as high as 6,000 yuan, or about $8,800, to consumers who buy a "new energy," or environmentally friendly, vehicle, Li Yizhong, minister of industry and information technology, said yesterday.

Li said the subsidy would help make up for the higher cost of "green" vehicles because of the huge investment by companies to develop the technology.

"The subsidy won't be effective if it is less than several thousand yuan," Li said. "Without government support, it would be difficult for Chinese families to buy new-energy vehicles."

Industry analysts estimated that green cars would normally be sold at a 50 percent premium over a traditional gasoline-powered model.

Last year, China expanded trial operations of new-energy vehicles in 13 cities, including Shanghai, Beijing and Shenzhen. The tryout, mainly limited to public service departments, included a subsidy of up to 420,000 yuan ($61,520) for the purchase of hybrid buses and up to 600,000 yuan ($87,880) for electric and fuel-cell buses.

Encouraging individual consumers to buy green vehicles will be the top priority in the future, Li said.

China wants to have 500,000 green cars rolling on the streets within three years while improving infrastructure, such as recharging stations, for these vehicles.

Inside Line says: Chinese government continues to tweak the market to help make green a preferred color among car buyers. — Vivian Jin, Correspondent