Shanghai Denies BYD Claim City Favors Its Own in Electric Autos

Jan 21, 2014 4:32 am ET

Jan. 21 (Bloomberg) -- Shanghai said it welcomes qualified automakers to supply new-energy vehicles as it rolls out its air pollution initiative, after BYD Co. said it failed to receive incentives because the city favored local companies.

China’s financial hub plans to introduce more than 10,000 new-energy vehicles by 2015, of which more than 30 percent will be made by automakers based elsewhere in China, the municipal government said in an e-mailed statement. The city had 2,743 of the eco-friendly autos in operation as of the end of last year, according to the statement, which didn’t specify where the suppliers were headquartered.

The government was responding to inquiries about comments by Stella Li, senior vice president of Warren Buffett-backed BYD, who said this month that the Shenzhen-based automaker had failed to qualify for local incentives in Beijing and Shanghai despite offering free trials. Government subsidies are important because of the high cost of building electric vehicles and charging stations.

“It’s easier to sell our buses and cars to Sao Paulo, California or Israel than in Beijing and Shanghai, and those places have better air than China,” Li said in a Jan. 3 interview at the company’s headquarters. “It’s disheartening as a Chinese to see how local interests are holding back the adoption of electric vehicles.”

Pollution may undermine plans for Shanghai to attract foreign investment and multinational firms, as the city implements a free-trade zone as part of a broader goal to become a global financial and logistics center by 2020. The city will speed up the use of clean energy and promote new-energy vehicles this year as it implements a clean air action plan, Mayor Yang Xiong said at a session of the municipal people’s congress on Jan. 19.

Government Subsidies

China plans to have 5 million alternative energy-powered automobiles by 2020. Local governments provide matching subsidies -- funded by local tax revenues -- on top of incentives by central government of as much as 60,000 yuan toward the purchase of an all-electric passenger vehicle and as much as 500,000 yuan for an electric bus.

Under a new program unveiled in September, the central government will focus on promoting the use of new-energy vehicles in the three regions anchored by Beijing, Shanghai and Guangzhou using subsidies through 2015, according to a joint statement by the National Development and Reform Commission and the finance, science and industry ministries.

Shanghai’s statement today echoes the directive set out by the central government in September, which set targets for local authorities to have at least 30 percent of new-energy vehicles made by automakers based elsewhere in the country.

The city will build 6,000 charging stations between 2013 and 2015, according to today’s statement.

BYD spokesman Cary Wei said he can’t immediately comment about the Shanghai government statement today when contacted on his mobile phone.

--Chua Kong Ho and Tian Ying. Editors: Chua Kong Ho, Gregory Turk