China, USA, give cash subsidies to electric autos

Zoyte.pngGreater use of electric autos is a win-win for the chemical industry. They will not only reduce competition with gasoline for feedstock, but also increase polymer demand – to replace steel and glass. So China’s entry into the market could be very important.

As always, the blog has been brought up to date by its friend Pedro Spohr of GALP, who keeps a close eye on developments. He notes that China has recently sold its first all-electric auto (see picture), 4 months ahead of Nissan’s planned Leaf debut in the USA.

China is also following the USA in offering enormous subsidies to buyers, in a pilot programme covering 5 major cities:

• Central government subsidies are up to 60k yuan ($9k)
• Many of the local governments offer similar amounts in addition.

China’s subsidies work via direct government allocation to manufacturers, in order to reduce list prices. Government is also funding the construction of charging stations and battery recovery networks.

Meanwhile in the USA, 20,000 people have already reserved the all-electric Nissan Leaf, which goes on sale in 5 states in December. And the New York Times reports they are also being given lots of incentives:

• $7.5k federal tax credit
• Cash rebates from state governments eg $5k in California, $2.5k in Tennessee
• Free or subsidised $3k home-charging units from the Energy Department
• Charging stations are being built by the $230m nationally funded EV project

The blog will continue to follow developments with interest.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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One Response to China, USA, give cash subsidies to electric autos

  1. Mark Sofman 15 October, 2010 at 8:29 pm #

    It won’t be win-win if electric vehicles don’t perform. Besides if they are supposed to be all that great, why subsidize them?

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