Beijing should skip incentives for EVs and plug-ins and let market pick winners

Yang Jian is managing editor of Automotive News China.

Last year, the Chinese government introduced generous sales subsidies for electric cars and plug-ins - but not conventional hybrids.

Beijing did this because it wanted Chinese automakers to leapfrog their Western rivals in the race to develop cutting-edge technology. One year later, China's EV market is virtually nonexistent.

Last month, Chinese premier Wen Jiabao called for a policy review and hinted that the current program had failed. Now, China's policy-makers must ask themselves whether the government should favor one type of EV over another.

The answer is no, and the reason is quite simple. Nobody knows for sure which type of alternative energy vehicles -- hybrids, EVs or fuel-cell vehicles -- has the best chance to succeed. Each type of powertrain has its pluses and minuses.

This is why global automakers like General Motors Co. and Daimler AG continue to develop fuel-cell powered vehicles and conventional hybrids along with their EVs and plug-ins.

We also know that automakers can make conventional gasoline engines more efficient by adding turbochargers, direct injection and other technologies.

Instead of favoring a particular technology, the government should simply subsidize fuel-efficient vehicles - regardless of the type of powertrain. The government should let the market decide which technology is best.

Any one-sided bet on a particular technology is premature and bears high risks. A case in point is the government's hitherto bet on plug-ins and EVs.

Eager to help domestic automakers to leapfrog foreign competitors, Beijing introduced a pilot program last year in five cities offering subsidies up to 50,000 yuan ($7,400) for a plug-in and 60,000 yuan for an EV.

As a result, nearly all Chinese automakers have designed plug-ins and EVs, but few have mastered the technology. And EV sales are abysmal.

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