China continues to push the new energy vehicle market forward

Ever since the State Council released its announcement on how to speed up development of new energy vehicles in the country, both national and regional departments have been working hard to implement policies favorable to the promotion of new energy vehicle sales. On this end, in the end of July, the National Development and Reform Commission announced that it would revise electricity prices for vehicle charging infrastructure. The next month, the Ministry of Finance announced that eligible new energy vehicles would soon be exempt from the Vehicle Purchase Tax; a list of these vehicles was released soon after by the Ministry of Industry and Information Technology.

In order to better understand what sort of influence this series of policies will have on the emerging new energy market, the Economic Daily conducted an interview of Ministry of Industry and Information Technology Minister Miao Wei (pictured).

As Mr. Miao explains, the policies are primarily aimed at benefiting consumers. Mr. Miao elaborates in further detail: "Considering that most pure electric sedans in the country are around 200,000 RMB ($32,537), the national and regional policies [that buyers] enjoy and the new exemption from the Vehicle Purchase Tax [which is] over 10,000 RMB ($1,626), as well as the fact that pure electric sedans are [already] exempt from the Consumption Tax, means that buyers can purchase a pure electric sedan for around 100,000 RMB ($16,268). This is already very close to a price that buyers can accept."

Currently the costs which purchasers of new energy vehicles have to endure - including the vehicle and vessel tax, electricity fees and other miscellaneous costs - amount to about a tenth of what owners of traditional fuel vehicles have to pay. If the battery life of a new energy vehicle lasts as long as the vehicle itself, the costs associated with an electric motor are also far superior to traditional fuel-based ones.

The policies have already started to show promise. According to statistics, monthly sales for new energy vehicles exceed 5,000 in both the months of July and August, over ten times greater than the relevent amounts from 2013. Sales look to further increase with the Vehicle Purchase Tax coming into effect on September 1.

"As manufacturers' [new energy vehicle] rapidly grow, these manufacturers will also become more confident in increasing their investments in new energy vehicle R&D, which in turn leads to the introduction of new energy models and a wider selection of models for consumers to choose from," Mr. Miao said. He added that such developments also had positive effects in decreasing China's dependence on foreign oil, reducing carbon emissions, and boosting the overall position of the Chinese automobile industry.

As the market expands rapidly, charging infrastructure in the city has also continued to increase. 600 charging stations and 27,000 charging posts have been built in key Chinese cities so far. The National Energy Administration has announced plans to promote further charging infrastructure development, including the installation of infrastructure in residences, villages and parking spaces. As infrastructure improves, new energy vehicles will become more attractive.

Another aspect that is crucial for the development of the new energy vehicle market are the establishment of new energy vehicle standards. Currently there are 75 new energy vehicle standards in place in China. The standards are uniform throughout the country and will allow for new energy vehicles to be charged at any station or post in the country. Mr. Miao explains that China's policies are among the most advanced in the world. Mr. Miao points out that virtually any policy found overseas is in place in China, where they are more rigorous, more detailed and more thorough than their foreign counterparts. While standards overseas are typically concerned with just battery system safety, China's policies are far more comprehensive, targeting individual components.