China approves first list of green car models for subsidies this year

BEIJING (Reuters) - China released on Monday this year’s first list of “recommended” green energy vehicles, paving the way for 185 car models to receive government subsidies.

Beijing has spent billions of dollars promoting electric and plug-in hybrid cars to help the domestic auto industry develop the technology to leapfrog global competitors, while also reducing frequent bouts of heavy urban air pollution.

But the discovery of widespread cheating in the subsidy program has prompted the government to step up oversight, cap subsidies, and raise technical standards for applicants.

As a result, all models previously approved for government subsidies are required to reapply this year.

The list issued by the Ministry of Industry and Information Technology (MIIT) included vehicles from BAIC Motor Corp Ltd, Geely Automobile Holdings Ltd, BYD Co Ltd, Chongqing Changan Automobile Co Ltd, and Chery Automobile Co Ltd [CHERY.UL].

Beijing is expected to approve more car models later this year. The government published five lists last year, giving the green light to 2,193 car models.

The ministry on Monday also approved several vehicles that use “ternary” lithium-ion batteries, which employ the chemical elements of nickel, cobalt and manganese (NCM).

NCM batteries, which Korean firms LG Chem and Samsung Electronics primarily make, were ineligible for subsidies under last year’s rules.

Beijing lifted those restrictions this year after requiring companies to conduct more rigorous safety testing.

Most Chinese battery makers prefer more stable but less energy dense lithium-iron-phosphate batteries, although some Chinese firms like Contemporary Amperex Technology Ltd also produce significant numbers of NCM batteries.

For graphic on China's electric car boom click:

Reporting by Jake Spring; Editing by Randy Fabi