Major automakers turn green to cash in on growing market

Booming market

With a rise in public in awareness of environmentally-friendly vehicles and the need for sustainable growth, China's green auto industry is booming.

The country's new energy vehicle production jumped almost threefold to 27,271 vehicles year-on-year in the first quarter. Sales increased 2.8 times during the same period, reaching 26,581 units, according to the China Association of Automobile Manufacturers.

Last year, the output of new-energy vehicles was 78,499 units, 3.5 times higher than in 2013, while sales more than tripled to 74,763 vehicles.

Industry insiders see huge potential in the sector, especially in light of the high expectations placed on the industry by the government and its supporting policies.

"Barring accidents, I believe China's new-energy vehicle market will surpass the United States to become the world's largest this year," Dong Yang, secretary-general of CAAM, said. "But the developing of charging infrastructures is clearly slower than the growing numbers of the new-energy vehicles."

Players' moves

To dispel concerns among drivers about the accessibility of charging stations and the range of e-vehicles, major companies are launching ambitious forays into the market.

Last week, FAW Toyota Motor Co Ltd signed a strategic deal with Yidao, a company that provides car pick-up services in China, to promote green travel. According to the deal, Toyota will provide 100 Prius cars for Yidao to ferry customers in Shanghai.

German automaker BMW's local joint venture, BMW Brilliance, last month teamed up with eHi Car Services to lease its fully electric ZINORO 1E in Beijing.

The manufacturer made the model available for daily and long-term rental last year, installing charging stations in customers' homes.

To boost sales, it has also increased the number of public charging points in Beijing and Shanghai.

Yet it is not just global players who are expanding the market. Chinese automaker BYD has made developing new-energy vehicles a priority, while its plug-in hybrid sedan, the Qin, has already proved popular, with 14,747 units sold in China in 2014.

This year, Geely also signed a deal with Taizhou Xindayang Group to make the Zhidou, an electric passenger car, in Gansu province. The joint venture will focus on developing and manufacturing e-vehicles for the domestic market.

Preferential policies

China is creating a favorable environment to boost quicker growth in the new-energy vehicle sector through intense government-led promotion. In 2012, the State Council, China's cabinet, set a goal of having 500,000 new-energy cars on the road by the end of 2015, and a total of 5 million by 2020.

To achieve this, the government plans to establish a research and development system as well as an industrial chain for e-cars within the next four years.

To promote new-energy vehicles, the State Council announced in July last year a purchase tax exemption from Sept 1 to the end of 2017. Tax-exempt vehicles include all electric cars, plug-in hybrids and fuel cell vehicles.

Last month, the State Council unveiled the "Made in China 2025" program, aimed at upgrading the country's manufacturing power base during the next decade. It includes special funding and tax incentives for 10 industrial sectors, including new-energy vehicles.

City authorities such as Beijing have also introduced supporting policies.

The capital plans to ensure drivers within the sixth ring road do not need to travel farther than five kilometers to reach the nearest charging station by the end of this year. The city is also planning to cut the costs of parking and toll roads for e-cars in the near future.

Hao Yan contributed to the story.