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New-energy future

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BEIJING, June 15 (Xinhuanet) -- China has just released a new set of policies to boost the new-energy vehicle sector, the latest in nearly two decades of government support for the industry.

Tax cuts for new-energy autos were announced last week, with the aim of increasing enthusiasm for the clean vehicles among automakers and drivers.

The vehicle taxes for 64 new energy-saving vehicles will be halved, according to an announcement jointly released by the Ministry of Finance, the Ministry of Industry and Information Technology (MIIT), and the State Administration of Taxation on June 5. This was the seventh new policy to promote the sector in the past three months this year.

As far back as the country's 8th Five-Year Plan period (1991-95), the State Planning Commission, now known as the National Development and Reform Commission, began to push forward new-energy vehicle development. Support policies for clean autos have been mentioned in each five-year plan since then.

Top leaders from domestic automaker China FAW Group Corp, commonly known as FAW, also gathered together Tuesday in Changchun, North China's Jilin Province, for a meeting about the company's electric auto development over the next eight years.

FAW's strategy was encouraged by the Energy Saving and New Energy Auto Industry Development Plan (2012-20) released by the State Council in April, under which the country aims to sell 500,000 units of electric and hybrid vehicles by 2015 and 5 million by 2020.

Development plans

FAW's new plan is scheduled to be announced in July, Wang Deping, assistant general manager of China FAW Group's New Energy Vehicle Branch, told the Global Times.

"We have great confidence in the development of electric autos in China," Wang said.

FAW had earlier revealed plans to invest 9.8 billion yuan ($1.54 billion) in new-energy vehicle research and development, as well as manufacturing preparation during the country's 12th Five-Year Plan period (2011-15).

In the area of passenger vehicles, FAW has developed a series of hybrid cars, plug-in hybrid cars, and pure electric cars. And in the commercial vehicle sector, FAW has sold more than 500 units of hybrid buses so far.

BYD Co, a Shenzhen-based carmaker, has ambitions to expand its electric auto business overseas. Its North America division and export trade division have been pushing forward the commercialization of new-energy cars, said the company.

BYD won an order for six electric buses from the city of Schiermonnikoog, Friesland Province, Netherlands, along with a 15-year maintenance and technical support contract on June 8, said the company.

Chery Automobile Co, China's largest indigenous carmaker, is also trying to seize the business opportunities in new-energy vehicle sector during the country's 12th Five-Year Plan period, said Chery.

So far, eight of Chery's new-energy vehicle development plans have been selected as part of the MIIT's list of scientific research projects. Seven of its new-energy car models have been selected for the government's list of recommended energy-saving vehicles.

Its new-energy vehicles have already started running in domestic cities including Beijing and Dalian, as well as parts of South America.

Safety issues

Following some recent safety problems with domestic new-energy vehicles, both automakers and industry watchers are paying increasing attention to the issue.

Last month, a BYD E6 electric taxi was involved in a fatal car accident and caught fire suddenly, which led to the death of the taxi driver and two passengers, raising concerns over the safety of electric cars. So far, no clear reason for the sudden fire inside the car has been disclosed officially.

Industry watchers questioned whether there are still problems in terms of the quality, design and technology of electric cars, and said that it sends a warning signal to the emerging industry.

"Safety is the most important thing," Cui Dongshu, deputy secretary-general of the China Passenger Car Association, told the Global Times.

Similar accidents have also taken place in Western countries and electric vehicle technology needs to be improved further, Cui noted.

BYD told the Global Times that it hopes to ease consumers' concerns about safety issues, but did not disclose more details about its safety measures and technologies.

Wang of FAW said that it has drawn up a set of technical proposals and is currently running safety tests.

The General Administration of Quality Supervision, Inspection and Quarantine and the Standardization Administration of the People's Republic of China jointly approved new national technology standards on May 17 for development of purely electric vehicles.

The standards, which will come into effect from July 1, emphasize safety, reliability and performance of the vehicles. Industry watchers called it a necessary step for regulating safety issues in the sector.

Costs falling

A total of 10,202 new-energy and energy-saving vehicles were sold in China in the first quarter this year, according to the China Association of Automobile Manufacturers.

However, the sales volume is still very small compared with the total of 4.79 million vehicles sold during the same period.

"The more consumers buy the new-energy vehicles, the lower the manufacturing cost will be," said Jia Xinguang, an independent auto analyst.

Wang of FAW said the cost of the batteries it uses for electric cars has declined by 30 percent in the past year.

As of 2014, with government subsidies, the purchasing cost of a pure electric car will be equal to a similar fuel-powered car, but the driving cost will be only one-seventh of the standard car, Wang said.

Meanwhile, ordinary consumers, especially younger drivers, are gradually showing more interest in hybrid and electric autos.

Around half of the drivers aged between 19 and 31 would consider buying hybrid and electric autos, according to a survey released by auditing firm Deloitte in April. And 7 percent of them plan to buy pure electric cars within five years, according to the survey.

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