China has mandated that at least 30 percent of government vehicles purchased in the next two years will have to be fueled by alternative energy sources.
The plan for "new-energy vehicles," China’s term for alternative fuel vehicles, includes electric cars, plug-in hybrids and hydrogen electric fuel cell vehicles, according to a Chinese announcement reported on by Bloomberg News.
After 2016, local provinces will also be required to meet the target. In the period between now and 2016, the percentage of alternative vehicles that the government will be required to buy will rise annually.
To help spur the EV market, China announced last week it would waive the 10 percent purchase tax on electric cars through 2017. The tax break is for domestic and foreign electric cars.
The market demand for EVs in China has fallen short of the government target of having 500,000 new-energy vehicles on the road by the end of next year; there are fewer than 100,000 vehicles on the road so far. If those numbers are any hint, it will be difficult to meet the government’s target of 5 million new-energy vehicles by 2020.
The government said that new sedan purchases for the fleets shouldn’t cost more than 180,000 yuan ($29,186) each, which should give a boost to Chinese EV makers that can compete at that price point, such as BYD.
The new rule from the Chinese government follows similar moves by other governments to encourage adoption of alternative fuel vehicles. In 2011, President Obama pledged that the federal government would convert 100 percent of its fleet to alternative fuel vehicles by 2015.
Along with buying the cars, the Chinese government will also have to build charging stations, which could help open the market for more consumers to buy electric vehicles.
A 2013 study from the International Energy Agency noted that half of the Chinese population is clustered in urban centers, with many living in multi-unit dwellings that lack charging infrastructure. People who have purchased EVs say they can’t use them on weekends because the only charging infrastructure they have access to is at their workplace.
One key to accelerate EV adoption in China could be a substantial network of fast chargers.
Earlier this month, Beijing released a plan for 10,000 rapid public charging stations. Most of those will be at transit hubs, such as airports and train stations, and not necessarily in apartment buildings. BYD’s Denza electric vehicle, released earlier this year, is the first EV in the world to offer DC fast charging for the home.