China angering citizens with new electric & hybrid car subsidies

China is taking a cue from the Unite States, Japan, and Europe with newly announced subsidies for hybrid and electric cars. These handouts are intended to catalyze development of fuel efficient vehicles in the country, and they signal that China is serious about competing in the global electric and hybrid car industry. But, there’s problem with that approach according to the country’s own citizens.

A widening gap between rich and poor in China places electric, hybrid and even traditional gas-powered cars out of reach for many. Understandably, that raises some tension when public tax dollars are funneled into a program that rewards the wealthy further. China is likely hoping to duplicate the success it saw last year with tax incentives for people buying vehicles who lived in rural areas.

With that program it saw “. . . vehicle sales surge 46 percent last year to 13.6 million units, surpassing the United States as the world's top auto market,” according to Reuters. This time around with electric and hybrid cars the effect will likely be muted because of expensive batteries and infrequent charging stations throughout the country.

Still, China’s top automakers are shifting their strategies to align with these subsidies because the money will be credited out directly to them rather than to consumers. Automakers are then expected to decrease prices accordingly for the general public. While that certainly has the potential to be more efficient, it also introduces temptation for corruption and cooking the books.

Initially the program will compensate 60,000 yuan (that’s $8,787.96) for electric cars and 50,000 yuan for some gasoline-electric hybrids. It will also only be available in specific cities. In the bigger picture this sort of initiative is great news because it creates a competitive atmosphere centered on fuel efficiency. That’s great for China, and the world because it reduces our impact on the environment. When hybrid and electric cars become truly affordable for the mainstream consumer we’ll be on the cusp of major change.