Shanghai is also accelerating construction of charging poles for electric vehicles. According to Shanghai's planning for the development of energy-saving and new-energy automobile industry, the city is trying to build charging poles every 5 km in urban areas and every 10 km in city suburbs. By 2015, there will be 6,000 charging poles and over 10,000 new-energy cars in Shanghai. At present, the number of pure electric private cars in the city is fewer than 10.

Ye said the inadequate number of charging poles is one of the reasons for the slow development and unsatisfactory sales volume of the new-energy vehicle industry. The planning and construction of charging stations and poles have not yet been standardized, and there is no uniform planning and distribution among different regions.

If there was to be a charging pole every 5 square km in Beijing and Shanghai, the difficulties of using electric cars would be rendered non-existent. In addition, if consumers were to be incentivized by favorable conditions such as easily obtained license plates and large subsidies, the sales volume of electric cars in Beijing and Shanghai may exceed 10,000 each year. Considering the trailblazing role to be played by Beijing and Shanghai as well as the promotion policies to be issued by cities such as Tianjin and Shenzhen of Guangdong Province, China's sales of new-energy vehicle may double in 2014.

Ye claimed the accelerated construction of charging stations will lay the foundations for a potentially huge market. According to his estimation, if each charging station costs 5 million yuan ($817,000), the market size may reach 10 billion yuan ($1.63 billion). Suppliers of related equipment will also benefit greatly from the construction project.

Phasing out subsidies

According to figures from the Beijing Municipal Government, the quota for new-energy cars was 1,666 in February, but there were only 1,428 registrations. It seems that far more people would still rather wait to buy conventional cars by purchasing a ticket with a lottery win rate of lower than 1 percent.

Xu said most consumers still have doubts in their mind in choosing new-energy cars. For example, besides charging poles, they are also concerned about safety as well as the availability and price of aftersales service for such vehicles. These problems cannot be addressed by relying on government policies alone; the role new-energy vehicle makers play should be central to solving these problems.

Xu said that in China's new-energy vehicle market, depending on government policies is not a good thing. Particularly, the fact that consumers depend on government subsidies when buying new-energy cars could discourage automakers' tendency to innovate. Therefore the government should phase out subsidies at the appropriate time.

According to present policies, government subsidies for purchasing electric cars range from 63,000 yuan ($10,250) to 108,000 yuan ($17,600), and the subsidy for each fuel cell electric car amounts to 360,000 yuan ($58,600).

Xu went on to elaborate that considering the present situation in China's new-energy vehicle market, new-energy vehicle makers must, when introducing new technologies to the market, innovate their sales pattern instead of waiting for government subsidies to take effect. For example, they can divide sale of cells and complete cars, lease out cells, or offer alternatives to charging cells built into automobiles, for example, by introducing detachable cells. This, he claimed, will remove most of the current obstacles in the new-energy vehicle market.

Ye said that compared with conventional vehicles, electric vehicles are more expensive, therefore government subsidies are necessary to encourage the purchasing of new-energy vehicles in the primary stage. However, China's new-energy vehicle industry should not rely on government subsidies ultimately, and it must be fully market-oriented. It is not certain whether or not government subsidies can successfully nurture a new-energy vehicle market, and how long it will take to nurture a real market.

With the growing production capacity and sales volume of China's new-energy vehicle industry, production costs will drop significantly, making new-energy cars increasingly cheaper. Therefore government subsidies should be reduced and eventually drawn back, Ye said.

Email us at: lanxinzhen@bjreview.com

China's New-Energy Vehicle Data

In 2013, China produced more than 17,500 new-energy vehicles, a year-on-year increase of 39.7 percent. Of the total, 14,243 were pure electric vehicles and 3,290 were plug-in hybrid vehicles.

More than 17,600 new-energy vehicles were sold, up 37.9 percent over a year before, of which 14,604 were pure electric vehicles and 3,038 were plug-in hybrid vehicles.

In comparison, China produced 22.12 million automobiles and sold 21.98 million in 2013, rising 14.78 percent and 13.8 percent respectively over the previous year.

(source: China Association of Automobile Manufacturers)