Geely hits out at protectionism in China's electric car market

Want China Times, Kung Chun-jung and Staff Reporter 2014-03-01

Workers assemble electric cars at a Shandong Weidong New Energy
 Automobile factory in Zouping, Shandong province, Oct. 27, 2013.
(Photo/Xinhua)

Amid the investment craze for new-energy cars in China, Li Shufu, chairman of China's Geely, the parent firm of Volvo, recently criticized the Chinese government's protectionist policies, saying that they will block the emergence of international-class electric car brands like Tesla in the nation.

The electric-car craze has been fueled by the recent news of Tesla's turnaround as the company is now turning a profit, according to Chinese-language Shanghai Securities News.

Li said that under the current policy, companies like Tesla cannot undertake research and development, design, production or sell cars in China as they lack a producer license. He urged the government to lift the ceiling of shareholding owned by foreign partners in joint ventures, now set at 50%, allowing for more competition which would benefit the industry.

The China Association of Automobile Manufacturers opposed this proposal, however.

The nation's electric-car market has also been stimulated by the chronic smog problem that has plagued China's major cities. The government hopes to have 500,000 hybrid and pure electric cars hit the nation's roads by 2015 and increase to 5 million by 2020, compared with sales of 17,600 electric cars last year and the less than 50,000 electric cars currently on the road.

According to Tencent's finance news webportal, Volkswagen plans to start manufacturing electric cars in China in 2016 and will turn out 10 models by 2020. Toyota, the world's largest automaker, is scheduled to start production of hybrid cars in China in 2015, while Honda will begin to produce hybrid cars in partnership with Dongfeng Motor and Guangzhou Automobile in 2016.

Automakers are scrambling to get a foothold in the market, attracted by the huge potential, as the annual demand will hit 2 million cars, so long as existing auto demand, at 20 million units a year, translates to demand for electric models.

Government incentives, meant to lower electric-car prices to an affordable level, will be key for the achievement of this goal, otherwise, electric cars will continue to be a luxury in China.