New-energy Vehicle Policy Shifts Gears

China adjusted its subsidy program for new-energy vehicles on Tuesday, with the scope and depth of the policy narrowing.

The move is in line with earlier remarks made by a senior official indicating that the country would shift the direction of the financial backing program for the sector.

The long-awaited blueprint, which was issued by four ministries led by the Ministry of Industry and Information Technology and the Ministry of Science and Technology, will resume the three-year purchase incentive that ended last year, in a bid to help electric vehicles gain further traction.

But the announcement did not, as widely expected, include conventional hybrid vehicles in the subsidy category, a move that industry observers said is critical to the proliferation of "green" cars.

The metropolitan areas surrounding Beijing, Shanghai and Guangzhou — the country's manufacturing and business hubs — will be prioritized by the new policy. The addiction to fossil fuel is high and air pollution is serious in those areas, observers said.

The central government plans to have at least 10,000 new-energy vehicles sold between 2013 and 2015 in each of the country's megacities and their neighboring regions, while other cities are set to get 5,000 units each during the same period.

The new directive sets even stricter criteria on electric vehicles' sources of origin, stipulating that 30 percent or more of cars purchased should come from a non-local automaker. No discriminative measures should be taken to favor domestic brands and squeeze out non-local players, the document added.

"The policy will effectively rule out unfair competition against non-local brands, which is a common practice in the new-energy car segment," said Wen Hu, marketing director of Jiangsu Alfa Bus Co Ltd.