China vows action against 'blind' electric vehicle growth

SHANGHAI (Reuters) - China will take action to curb the “blind” development of its rapidly growing electric vehicle sector, a spokeswoman for the state planning agency said on Friday.

FILE PHOTO - A staff member hooks up a charging cable to an electric vehicle (EV) at a charging station in Liuzhou, Guangxi Zhuang Autonomous Region, China July 31, 2017. Picture taken July 31, 2017. REUTERS/Stringer

China is aggressively pushing the new energy vehicle (NEV) sector as it tries to not only cut air pollution from traditional combustion engines but also boost China’s high-tech clout.

But experts have warned the sector is facing overcapacity risks, with as many as 102 firms producing 355 different kinds of electric, hybrid and fuel cell vehicles by the end of March, according to industry ministry data.

Meng Wei, spokeswoman with the National Development and Reform Commission (NDRC), told reporters at a briefing in Beijing that China will adjust industry entry thresholds, strengthen corporate responsibility and improve government supervision to help bring order to the sector.

“At present, new energy vehicle technology is improving very quickly, and the scale of the market is gradually expanding, but there are also indications of blind development,” she said.

Chinese NEV manufacturers sold 328,000 units in the first five months of 2018, up 141.6 percent on the year, according to data released by the industry ministry this week.

Total NEV ownership reached 1.8 million by the end of last year, more than half of the global total.

Generous local government subsidies aimed at producing regional industry champions have contributed to overcapacity and inefficiency, industry executives said in March.

The government is also concerned that the rapid proliferation of different vehicle designs will hinder the efforts of manufacturers to gain a foothold in overseas markets.

The industry ministry has already removed tax breaks for nearly 2,000 electric car designs in an attempt to streamline the sector and curb irrational investment.

Reporting by David Stanway; Editing by Muralikumar Anantharaman