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Business trends

Chinese motorists head reluctantly down electric road

Regulators push battery power in hopes of creating new auto industry leader

Customers size up Chinese automaker BYD's Song EV300 electric car at a dealership in Beijing on Oct. 17. (Photo by Akira Kodaka)

BEIJING -- China is pushing for a rapid switch to electric cars as it aims to become the world leader in next-generation transport by enticing foreign automakers to build plants and by concentrating on electric vehicle technology.

President Xi Jinping promised a "revolution" in clean energy at the opening of the Communist Party congress on Oct. 18. The government's goal is to encourage foreign automakers to transfer electric and other auto technology to China by dangling the carrot of its gigantic market. This also jives with its goals of reducing air pollution and traffic congestion.

The rapid growth of the electric car market in China is being driven by policy rather than the market. The government is imposing strict rules designed to slash auto emissions and unsnarl traffic in big cities. Drivers, ready or not, are turning China into the world's largest electric car market.

Wang Jie, 35, who works for an internet company in Beijing, expressed frustration at having little chance of getting a gasoline-powered car. Beijing introduced a license plate lottery system for passenger cars in 2011 to ease congestion. In the past three years, Wang has applied more than 10 times for a license plate, but has yet to receive one.

Some 2,859,000 residents applied for plates in Beijing in August, but only 14,000, or 0.5% of the total, got them.

Six cities, including Tianjin, Guangzhou and Shenzhen, have similar systems in place, each with an acceptance rate of less than 1%. Shanghai has adopted an auction-based approach. There, a license plate goes for more than 90,000 yuan ($13,563).

Because getting license plates for gasoline- and diesel-powered cars is difficult, drivers are turning to so-called new-energy vehicles -- electric, plug-in hybrid and fuel-cell cars.

Only three cities restrict the issuance of license plates for new-energy vehicles, and the rules are much looser than for conventional cars. In Beijing, drivers who wait a year or two are guaranteed to receive plates. Electric cars are thus a lot more accessible than gasoline-powered vehicles.

Juicing the market

Government subsidies give the market for new-energy vehicles a further boost. The e5, an electric car made by BYD, is China's most popular model. It goes for around 200,000 yuan. In Beijing, however, motorists can get subsidies worth about 60,000 yuan, which makes the car more affordable.

More than 10 Chinese cities, including Beijing and Tianjin, restrict the use of cars according to the last digit of the license plate and the day of week to ease traffic jams. Many new-energy vehicles are exempt from the regulations.

China became the world's largest market for these cars last year, selling more than 500,000. Passenger cars make up around 330,000 of those. Beijing, Shanghai and Guangdong Province, which restrict the issuance of license plates, were the biggest local markets.

Although people can still buy gasoline-powered cars, the rules in some cities make it hard. But going electric brings its own problems: Electric vehicles offer shorter range and recharging them at home or at filling stations takes a long time. And fewer models means less choice when it comes to design. But because it is easier to buy an electric car relatively quickly, more drivers are likely to choose them.

Many urban residents are unhappy with the pollution caused by auto emissions, potentially threatening the social stability that China's rulers prize above all. This prompted the government to announce new rules requiring automakers operating in the country to meet minimum targets for the sale and manufacture of new-energy vehicles, starting in 2019.

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