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R&D support needed for EV industry

China is to shift the direction of its financial backing of the new-energy vehicle sector, by supporting research and development efforts of its main automakers, rather than simply offering consumer discounts on vehicle purchases, a senior minister said on Thursday.

In its efforts to increase the number of electric vehicles, or EVs, on its roads over the next five years, Wan Gang, minister of science and technology, said government subsidies are only "short-term solutions", and that the industry can only be sustained and expanded by raising technology levels and lowering costs.

He said direct government incentives for consumers are likely to be phased out by 2020, if operational expenses can be lowered and the market expanded.

He declined to comment on the possible renewal of subsidies on electric vehicles, which expired by the end of 2012.

Central government rebates of up to 60,000 yuan ($9,790) used to be offered on the purchase price of battery-powered cars.

"The government is unwaveringly committed to the industry, but EV makers should never count on subsidies to survive," Wan said on the sidelines of the 2013 International Forum on Electric Vehicle Pilot Cities and Industrial Development in Shanghai on Thursday and Friday.

"It is imperative (for companies) to enhance their core competence with research and innovation."

A recent study by the United Nations Department of Economic and Social Affairs showed that China holds just 1 percent of total patent registrations for lithium ion batteries, a critical component of EVs, while Japan owns 52 percent and the US owns 22 percent.

Local governments have pledged to support the R&D of key EV technologies.

For instance, Guangdong provincial government plans to invest more than 57 billion yuan into 66 key new energy projects between 2015 and 2020.

While cars with internal combustion engines are generally less expensive to buy, Wan claimed that EVs are a quarter of the price to run, compared with gasoline and diesel counterparts.

He praised the efforts of several local EV initiatives, including the unveiling of Shanghai New Energy Vehicle Data Collection and Monitoring Center, which made its debut on Thursday.

The center will be capable of real-time monitoring of 2,000 electric vehicles in the city during the first phase of a 5-million-yuan project, to collect data on their performance and running.

The data will be collected via electronic terminals, which transmit information to the monitoring center by GPRS.

The center will record vehicle mileage, battery use, performance of recharging stations and other systems-management information.

Around 80 percent of the cars linked to the system will cover less than 80 kilometers per day, according to statistics.

Wan said such information will be of great value for automakers and research institutions in the future, as they develop new EV designs.

By the end of March, China had around 39,800 electric vehicles on the road, 80 percent of which were used for public transport.

But Wan urged higher private use of EVs, as the government looks to reduce the country's dependence on fossil fuels.

Joining Wan at the Shanghai event, Maria Van der Hoeven, executive director of the International Energy Agency, said that about 160,000 EVs were sold globally last year, just 0.02 percent of the entire car market.

Despite an ambitious projection by the IEA that 90 percent of light-duty vehicles will be powered by electric motors by 2050, Van der Hoeven added that immediate demands are unlikely to be met, due to supply shortage.

Various local governments in China have expressed an interest in supporting the electric vehicle industry, and have rolled out incentives to lure customers.

For example, the Shanghai municipal government offers a 40,000 yuan rebate on the purchase of a battery-powered car.

Buyers from Shanghai's Jiading district, which has positioned itself as an international EV pilot zone, can benefit from an additional cash rebate worth 15,000 yuan.

The program will last two years, and district head Ma Chunlei said she hopes it will result in the sale of 350 EVs.

Shanghai's new energy car market was worth 3.5 billion yuan in 2012, according to Vice-Mayor Weng Tiehui.

About 300 Roewe E50 vehicles, China's first indigenous purely electric super-mini car, have been ordered for private use, she noted.

Shanghai-based vehicle rental company eHi Car Service Co Ltd has also embraced electric vehicles - from June it will add 500 Roewe E50s to its 10,000-vehicle Shanghai fleet.

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