China yesterday released details of its new green car subsidy programme, outlining plans to further boost the nation's burgeoning auto industry and move consumers away from fossil fuel-powered vehicles.

According to state news agency Xinhua, subsidies of up to 60,000 yuan (£6,000) will be given to buyers of pure electric vehicles in the five cities chosen for the pilot programme – Shanghai, Changchun, Shenzhen, Hangzhou and Hefei – while buyers of plug-in hybrid cars will be eligible for incentives worth up to 50,000 yuan.

The government will allocate the money to car makers, which will lower the prices of relevant models accordingly. The levels of subsidies will then be reduced once car makers have sold 50,000 green cars.

The cities will also receive an unspecified amount of financing for the construction of electric charging infrastructure.

Reuters reported that auto industry executives said the subsidies are likely to apply only to vehicles produced in China, although this has not yet been confirmed by the government.

In addition to the new programme limited to the five specified cities, the government said it will also offer nationwide subsidies of 3,000 yuan on purchases of cars with 1.6-litre engines or smaller.

Beijing is keen to reduce oil imports and improve air quality in China's rapidly expanding cities, but so far the price premium on electric cars has discouraged widespread uptake.

Despite modest sales of green cars to date, Chinese car makers are racing to bring low-carbon vehicles to market.

(businessGreen)

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