China Charging Past United States In Electric Vehicle Output

BEIJING — China’s auto sales could be heading for a rare fall this year — except among electrics and plug-in hybrids, where sales have almost quadrupled so far in 2015.

With a part-carrot, part-stick strategy of incentives and targets, Beijing is pushing car makers to develop battery electric cars, seeing this as its best shot at closing a competitive gap with global rivals who have a 100-year headstart in traditional combustion engines.

Electric and plug-in hybrid car sales jumped 270 percent to 108,654 cars in January-August, the China Association of Automobile Manufacturers (CAAM) said on Thursday, and China is on track to overtake the United States as the world’s leading producer, making more than 130,000 such cars this year, according to consultancy LMC Automotive.

The government has set a goal of annual production of 1 million new energy cars by 2020, though industry researcher IHS Automotive forecasts output then at nearer 791,000.

Electric powertrains are simpler to develop, and driving a push to green cars fits President Xi Jinping’s policy goal of reducing pollution.

With an eye on both big subsidies and looming fuel economy targets, automakers in China are earmarking at least 50 billion yuan ($7.86 billion) this year for developing and making “new energy” vehicles, a Chinese catch-all term for electric and highly electrified cars, data compiled by Reuters shows. That’s slightly more than what Ford Motor Co. will spend this year developing all of its new vehicles worldwide.

“Some time ago, Xi Jinping explained it very well, saying that developing new energy vehicles is the Chinese auto industry’s only road to grow from being big to being strong,” Xu Heyi, chairman of Beijing Automotive Group [BEJINS.UL] and a high-ranking Communist Party official, told reporters recently.

As for the carrot: Drivers in Shanghai, for example, can save up to 182,600 yuan ($28,600) over a traditional gasoline-powered car, by taking advantage of free license plates for some green cars and other subsidies, according to official data and analysts’ estimates.

However, Beijing said in April it would roll back subsidies faster than expected, and may now lean increasingly on fuel economy requirements that grow progressively stricter to 2020.

The central government plans to roll out a California-style system that rewards manufacturers and drivers for going electric, while punishing those who rely on traditional gasoline cars, Beijing Auto’s Xu said in July.