Subsidy policy is more symbolized

　　Ministry of Finance, Science, Industry and Information as well as the National Development and Reform Commission jointly issued the long-awaited incentive program for fuel-efficient vehicles on a trial basis in five cities Shanghai, Changchun, Shenzhen, Hangzhou and Hefei. The introduction of the policy has caused all sorts of hot discussions. Generally speaking, I believe the symbolized meaning of this subsidy policy is more that the practical meaning.

　　1, The highlight of the policy itself is to support China’s self-owned brands through subsiding pure electric cars while constraining, hybrid cars. From this point, I believe this policy is the one most closest to the actual situation during recent years and with the clearest intention of supporting for the development of China’s self-owned brands.

　　The most direct effect of the implementation of this policy is the government’s support for the development of new energy technologies guiding by pure electric models has been demonstrated fully.

　　This result shows that the policy-makers has clearly understood the national realities of the development of the new energy cars and recognized the wide gap between China and the world advanced level in terms of the traditional cars, which will inevitably cause wider gap in the field of hybrid technologies. Due to relatively simple transmission and control technology of pure electric vehicles, the gaps between domestic and foreign auto companies are relatively narrow. Besides, since pure electric vehicles have a strong dependence on infrastructures, driven by the government, China can promote the large-scale application of these new energy models through speeding up the construction of infrastructures, which will probably narrow down the technological gap or even take the leading position.

　　2. The pilot works in Shanghai, Changchun, Shenzhen, Hangzhou and Hefei has clearly implies the precaution and conservatism of this policy itself. Why these five cities is thought-provoking. It is generally believed that’s rooted in the intention to shore up self-owned brands. However, it is understandable when referring to Shenzhen, Hangzhou and Hefei. However, as to Shanghai and Changchun, who started from joint ventures while developed self-owned brands by the pressure of public opinion are to some extent questionable. Besides, FAW, SAIC and Dongfeng have all been successfully transformed into represents of China’s independent brands while Guangzhou Automobile is also striving to develop its own brand. I do not know whether the domestic market will be fully dominated by independent brands in the near future.

　　In fact, I can assert here in the short term, there will be no private use of pure electric cars due to the climate conditions in Changchun. Of course the possible application within the FAW employees should be ruled out.

　　3. The introduction of this policy largely sprang from the proposal of deputies to the National People’s Congress and public pressure. According to my understanding, to submit proposals for energy saving and emission reduction has become the trend of the NPC session during the past two years, among which the proposals for the promotion of energy saving vehicles has occupied a dominant position, especially from the deputies of in the automotive industry-related parts companies and R & D institution. To delay the introduction of the policy will depress these deputies.

　　4. The existing subsidies are not enough to promote electric cars. Take A0-class car for example, considering the subsidy policy is 3,000 Yuan per kWh and the maximum subsidy 60,000 Yuan, to assembly20 kWh batteries is the best choice. Even though mass production is taken into account, the cost of 20 kWh battery would be not less than 80,000 Yuan, even the cost of electric cars without batteries are equivalent to conventional vehicles, which can not turn true in two years, the electric cars will cost the consumers 20,000 Yuan more after subsidized 60,000 Yuan. Besides, after the mileage of 100,000 to 200,000 km, the costs for replacing new batteries will be shouldered by users themselves only. From the present perspective, the fuel costs saved are not enough to cover the increased purchase costs. What is more, since the infrastructure is far from perfect, the facility of electric cars is not comparable with traditional vehicles.

　　Generally, though the symbolized meaning of this subsidy policy is more that the practical meaning, this policy still clearly shows the Government's position and is conducive to the development of new energy vehicles.

　　(Translator: Yalong/Jessie)

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