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Automobiles

China's subsidies to fast-track development of fuel cell vehicles

Toyota expects windfall from program, which does not exclude foreign automakers

Chinese government subsidies for fuel cell vehicles will target mostly buses and other commercial vehicles. (photo from local TV news report)

BEIJING -- The Chinese government said Monday it will roll out subsidies to companies developing core fuel cell technology in a bid to boost the country's competitive advantage in producing the hydrogen-propelled autos.

The new program will replace existing purchase assistance and is slated to last for four years. The central government will select development proposals submitted by local governments, which will use the subsidies to fund FCV technology developers in their areas.

The Ministry of Industry and Information Technology and the Ministry of Finance, sent notice of the subsidy to local authorities.

Chinese manufacturers of electric vehicles are facing fierce competition from foreign rivals. By positioning FCVs as a strategic next-generation automobile on par with electric-powered cars, Beijing aims to take the lead in the global development race.

The new program is expected to be a boon for Toyota Motor. The Japanese automaker owns a 65% stake in a Chinese joint venture that develops fuel cell systems with local partners. China's new energy vehicle field is open to foreign capital, and the subsidy program contains no language specifically excluding foreign-owned entities.

China introduced purchasing subsidies for electric vehicles in 2009. Resulting sales increases helped automakers boost development of the vehicles. Now China is the world's largest market for electric vehicles, with roughly 1 million units sold annually.

On the other hand, only about 7,000 fuel cell vehicles have been sold in China due to the complexity of developing the technology. To address this, the government decided to directly subsidize the development of the technology.

The incentives will encourage the development of core components, such as electrodes and fuel cell stacks, to establish a supply chain. The program will prioritize buses and other commercial vehicles.

In submitting applications, local governments are expected to provide such information as the track record of participating companies, as well as their research plans and the situation regarding the supply chain.

The government will accept applications through mid-November. Possible candidate regions include the capital economic zone in Hebei Province encompassing Beijing and Tianjin, as well as the Yangtze Delta centered around Shanghai. The Pearl River Delta surrounding Guangdong Province and the urban strip containing the cities of Chengdu and Chongqing are also contenders.

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