READY FOR USE: A worker tests the first large-scale charging station for electric vehicles in Wuhu, Anhui Province, which was put into operation on June 1, 2010. The station has 10 direct-current charging poles and 10 alternating-current charging poles, and can allow 10 e-buses and 10 e-cars to charge at the same time (CHEN LIXI)

At the beginning of 2009, MOST, MIIT, the Ministry of Finance and the National Development and Reform Commission organized promotional campaigns of energy-efficient and new energy cars. The Ministry of Finance will subsidize e-car use for public transportation, taxis, public service, environmental sanitation and postal services in 13 cities including Beijing, Shanghai and Chongqing municipalities.

At present, sales of e-cars in China are still relatively negligible. In 2009, total sales revenue of e-cars barely reached 133 million yuan ($19.88 million). Compared to the 13.64 million vehicles sold in China and a 46-percent year-on-year growth in the same year, e-car sales were next to nothing.

The e-car market in China is still lingering at the concept stage and has not been entered large-scale development. Due to the lack of local government promotion, problems in standardization processes and the lack of supporting facilities, consumers are skeptical about the e-cars' prices, durability and speed. Those factors have all restricted the development of the domestic e-car industry.

Foreign ambitions

Foreign investors have sensed business opportunities since the Chinese Government's commitment to supporting e-car development and are pouring money in the country's e-car market.

On April 10, 2009, the Renault-Nissan Alliance announced in Beijing it had established a cooperative partnership with MIIT in terms of promoting zero-emission vehicles in China. Nissan plans to launch its first electric vehicle in China at the beginning of 2011, and will promote electric vehicles produced in China to the whole world in 2012.

CITIC Guoan Group, a leader in the field of lithium batteries in China, has signed a cooperation agreement with the government of the city of Nantong, Jiangsu Province, for the company to form a strategic partnership group with well-known multinational companies including the French Michelin Group and the German Degussa Co. to invest in an e-car project in the city.

The U.S. ZAP electric vehicle producer signed a purchase agreement with Zhejiang Jonway Automobile Co. in the middle of September this year to gain access to the Chinese market. The deal is awaiting approval from the relevant government department and will be the first foreign company purchase of a Chinese vehicle manufacturer.

Before the deal, ZAP formed ZAPJonway—an electric vehicle joint venture with the Zhejiang company. It is now producing a number of electric SUVs called the A380, which is expected to carry five passengers at a speed exceeding 110 km an hour, with the distance of per charge surpassing 300 km. The SUV sells for $25,000.

Market worries

Favorable policies for e-car development have aroused worries among industry insiders.

If a foreign automaker decides to produce lithium batteries and powerful electromotors, they will have to set up the factory with a Chinese company and can hold no more than 49 percent of stake in the joint venture. In 2009, MIIT issued a decree that among three key technologies—battery, electromotor and controlling systems—foreign companies should use indigenous Chinese technologies on at least one of them.

Those regulations are causing foreign automakers to worry about their own intellectual property rights if they sign cooperation agreements with their Chinese counterparts. As a result, even though foreign manufacturers covet the Chinese market, they are reluctant to invest all their money in a joint venture.

In addition, as the 16 Chinese enterprises have formed an e-car alliance, foreign investors fear the technology standard will be monopolized by the alliance.

A report by the China Investment Consulting Co. says electric vehicle producers' basic instinct is to join in the establishment of industrial standards. Once the central SOE alliance is able to make its own standard nationally applicable, other companies will have no other choice but to accept. It will give rise to unfair competition and squeeze out non-SOEs, which will be harmful to the development of the whole e-car industry.

Private companies have the biggest worries. Take battery research and development capability as an example. At present, a large number of batteries used in electric vehicles are not produced by SOEs, but by private companies. For instance, in Hangzhou, capital city of Zhejiang Province, the 105 hybrid buses now being put into service are produced by Cens Energy-Technology Co. Ltd.—a private enterprise. Major lithium battery provider BYD Co. Ltd. is also private. The two companies have raised concerns about the central SOEs' priorities in setting the rules.