Overheating concerns

However, some government and industry officials have recently warned against the possibility of an overheated market.

Xin Guobin is chief of the industry policy department under the National Development and Reform Commission, the nation's economic planning agency, recently said that the rush to produce green cars has raised the risk of redundant projects and potential overcapacity.

Chen Bin, director of the commission's Department of Industry, said China has too many enterprises involved in green vehicle development.

"Many companies simply do not have the research and development capabilities," Chen said at a recent auto industry forum.

Some that cannot master core technologies have to outsource key components for assembly, he added.

"This kind of auto manufacturing should be curbed, as it's not conducive to healthy development of the automobile industry," Chen said.

Some analysts are concerned whether there will be a market for 1 million green vehicles that tend to cost more than traditional vehicles.

Consulting firm PricewaterhouseCoopers recently reported that even in Europe, which has been a leader in green energy development, electric, hybrid and other alternative energy cars only account for 10 percent to 15 percent of the total automobile market. The report cited inconvenience and higher prices as a reason for lower acceptance in the marketplace.

According to statistics from the National Passenger Car Information Exchange Association, Japan's Toyota last year sold only 899 units of its hybrid Prius - currently the world's best-selling new energy car.

Since the model entered China market in 2006, total sales had only reached 3,500 units by the end of 2008.

BYD's F3DM, the first mass-produced plug-in hybrid to hit the international market last December, has reported stagnant sales due to recharging problems.

(China Daily October 26, 2009)