The BMW Brilliance Automotive Ltd. explores new energy cars for Chinese car market. [File Photo/Yangcheng Evening News]

The Ministry of Finance recently announced that China will continue to offer subsidies for new energy vehicles after the existing policy expires at the end of 2015.

Meanwhile, the subsidies will be cut by 5 percent in 2014 and 10 percent in 2015.

Luo Lei, deputy secretary-general of the China Automobile Dealers Association, told CRI that the gradual reduction of the subsidies will be conducive to the industrialization of "green" cars in China.

"I think the subsidy cuts stipulated in the policy will play a key role in stimulating and guiding the consumer market. As the market becomes activated, the guiding role of the policy should gradually fade out."

Xu Weihan, the CFO of "evbuy.com", an electrical car dealer based in Shanghai, asserts that the drop in subsidies hasn't hindered sales and will not deter green auto dealers.

"The reduction in the subsidies from the government should not result in a corresponding rise in the prices of the green vehicles being offered for sale. According to our data for their reported prices, a large number of manufacturers have actually lowered their prices following the subsidy cut."

Additionally, under the amended policy, the subsidies will no longer be given by local governments to dealers according to where the car is sold. Instead, new energy vehicle makers will receive subsidies directly from the central budget. According to Luo Lei, this adjustment to the subsidy program should serve to greatly encourage producers of alternative energy vehicles.

"When the local governments served as the go-between for the central government and automobile manufacturers in granting subsidies, there were often long delays in the issuance of subsidies, which hindered the enthusiasm of green auto enterprises. If the subsidies are directly given by the central government, the process will be simplified, and this should serve to excite green auto producers"

China produced a total of 17,533 new energy vehicles in 2013, an increase of 39.7 percent from the previous year.

Data released by the China Association of Automobile Manufacturers in January showed that China sold 17,642 new energy vehicles last year including domestic and imported vehicles, up 37.9 percent from 2012.

The majority of sales of new energy vehicles were in the passenger vehicle category last year; private car buyers are being deterred from purchasing new energy cars due to the lack of support facilities, such as charging stations and parking lots, currently in place.

Luo Lei believes that the auto industry should regard the promotion of new energy passenger vehicles as its duty.

"Promoting the use of alternative energy vehicles in the public transportation sector, such as through operating environmentally friendly buses, would offer an exemplary public service."

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