Vice-Premier Ma Kai said at a recent seminar in Shenzhen that China will create a favorable environment for the development of the renewable energy vehicle industry, highlighting the importance of breaking local protectionism and ensuring fair competition.
China has taken some tentative steps in recent years to develop its new energy vehicle sector. However, despite the enormous input of capital and preferential policies that include a purchase subsidy, homegrown companies are yet to really make a breakthrough in the market. One of the main reasons for that is the market for new energy vehicles is not open and competitive, said a commentary in Economic Daily on Monday.
Among those Chinese cities that have launched a pilot program to promote the use of renewable energy vehicles, some have also formulated protectionist policies to protect local companies.
The authorities in Beijing, for instance, have recently published a subsidy catalog for new energy cars. However, the catalog does not include plug-in hybrid electric vehicles, which local automakers are not prepared to produce in the short run. Because of this popular models such as the Qin, a plug-in electric car, produced by the Shenzhen-based automaker BYD, are excluded from the capital’s subsidy list.
Another challenge facing manufacturers of new energy vehicles is it remains difficult to obtain the approval needed to produce the vehicles, thanks to various policy thresholds. For instance, Wanxiang Group, a leading auto parts company in China, established an electric car company back in 2002, but it failed to acquire the necessary approval and had to retreat from the new energy vehicle industry. Although it won a bankruptcy auction for the assets of the American automaker Fisker Automotive, it remains unclear whether the auto parts company will succeed in its quest at home.
As an emerging industry, the new energy vehicle sector has enormous space for growth if properly encouraged and nurtured. But administrative bodies nationwide and local governments at all levels need to take bold moves in order to break the institutional shackles and build an open and competitive market.
Only by making the opportunities available to the new investors and manufacturers and letting the diverse technologies, products and business models fairly compete in the market can the country’s new energy vehicle sector stay innovative and thrive.