China Urged to Subsidize 'New Energy' Vehicles

By NORIHIKO SHIROUZU
TIANJIN, China—The head of BYD Co., one of China's leading makers of electric vehicles, urged the Chinese government to subsidize private purchases of all-electric battery cars and other "new energy" vehicles, saying their widespread adoption in China depends on it.
Speaking at an industry conference Sunday, BYD Chairman Wang Chuanfu said a lack of consumer incentives and subsidies has kept BYD from making a plug-in hybrid car available for private buyers. He warned that a continued lack of government assistance might doom all-electric cars and plug-in hybrids in the marketplace because of their currently high cost.
"We're at a critical make-or-break juncture in our effort" to make electric vehicles mainstream, Mr. Wang told the conference. To help accelerate an adoption of heavily electrified vehicles "the government needs to play a key role and help us reduce their cost, especially for private buyers."
Mr. Wang called for rebates, tax cuts, and policies to pave the way for more taxi companies to use electric cabs, among other measures.
BYD, which makes both batteries and cars and is part-owned by a company controlled by American investor Warren Buffett, is gearing to launch an all-electric battery car called e6 in China this year. The Shenzhen-based company already sells a plug-in hybrid car here called the F3DM, with a small gasoline engine to charge its batteries. BYD began selling the F3DM in December to fleet customers, such as banks, but hasn't made it available for consumers. Mr. Wang has said the delay is because the car, priced at about 150,000 yuan, or roughly $22,000, is too expensive for most private buyers in China.
Mr. Wang and other industry and government officials at the Tianjin conference pointed to what they described as good prospects overall for electrified "green" cars to become more mainstream. But it remains unclear whether makers of environmentally friendly cars like BYD might get the consumer incentives they are looking for.
One senior Chinese industrial policy maker, speaking at the conference Sunday, pointed to reservations among some Chinese officials about providing consumer incentives to spur electric-car sales. "Why do we need to provide subsidies and rebates for wealthy private buyers who would be the first in line to buy electric cars? That's a question some of us in the government are asking," said Chen Jianguo, a senior official at the National Development and Reform Commission, China's main economic planning agency.
Other officials sounded a more enthusiastic note. Wan Gang, China's minister of science and technology, told the conference that electric vehicles provided opportunities for China to "catch up with and exceed developed countries" in the auto industry.
They are a "key driver for a new economy" for the world, but an especially strategic area of interest for China, he said. He pointed to the advantage of large deposits within China of lithium and other rare-earth metals that are needed to produce key electric car components, such as batteries and high-power electric motors, and improve their performance.
New-energy cars are "the way forward" and "a new source of growth" for China, and the country thus stands ready to allot more subsidies to accelerate related research and development activity, he said.
—Ellen Zhu in Shanghai contributed to this article.
Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com