China’s Electric Vehicle Dilemma

　　Caixin

　　February 10

　　2014 marks the fourth year since China launched its industrialization of electric vehicles. However，even in pilot cities like Beijing and Shanghai，it remains difficult for consumers to buy an electric vehicle.

　　In order to promote electric vehicles，which are more expensive than traditional fuel-burning vehicles，both the central and

　　local governments have provided subsidies to electric vehicle purchasers. For example，for an E6，an electric car produced by BYD Co. Ltd.，which sells for 360，000 yuan ($59，076)，the buyer can receive about 60，000 yuan ($9，846) from the Central Government and another 60，000 yuan from the local government. This means that the purchaser can get the E6 for only 240，000 yuan ($39，384).

　　But in practice，local governments are only willing to pay the subsidy to local enterprises. In this case，because BYD is headquartered in Shenzhen of Guangdong Province，to buy an E6，Shenzhen citizens need to pay 240，000 yuan，while Beijing citizens would have to pay 300，000 yuan ($49，230). Due to this subsidy policy，China’s electric vehicle market is divided into separate and closed territories.

　　The subsidy policy has not only twisted the market，but also twisted electric vehicle manufacturers. Many enterprises have made big investments into electric vehicles，but so far are seeing little hope of industrialization. Against this backdrop，they have turned to obtain the government’s special funds and subsidies as the only goal. They don’t even consider whether their vehicles can meet the demands of the market.

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