China To Best U.S. in EVs But Not Hybrids

China is likely to become the largest market for plug-in electric vehicles thanks to a larger relative government investment, but will trail the U.S. in hybrid sales.

The Chinese government announced it will spend $14.7 billion through 2020 on alternative drivetrain vehicles, with the bulk of the money going towards all-electric vehicles, according to news reports quoted by Edmunds.com’s Green Car Advisor.

That’s a greater outlay in consumer subsidies, industry incentives and spending on charging infrastructure than in the U.S. which (for now) boasts a much larger economy. The Chinese government would like 5 million alternative-fuel vehicles to be on the roads by 2020.

The U.S. government has committed more than $2.5 billion in incentives for battery makers, consumer purchases, and for charging infrastructure, but won’t come close to the Chinese commitment in future years. Not all of that money is bearing fruit. The DOE gave A123 Systems a $249 million grant last year to manufacture lithium ion batteries in Michigan, ostensibly for electric vehicles under contract to Chrysler. Last week A123 Systems ended its work with Chrysler and is now focusing more on batteries that provide energy storage for the grid.

Pike Research projects that between 2010 and 2015 China will have 1.85 million hybrids and EVs sold , with slightly more EVs (1 million) on the road. In the U.S. more than 2.3 million hybrids will be sold during that time, and 840,000 plug-in and all- electric vehicles.

China has a great ability to direct its domestic market than the more open U.,S. market, and with greater incentives and many first time car buyers coming into the market, it’s understandable that China will pass the U.S. in EV sales. The governments have similar motivations – a desire to reduce carbon emissions, increase domestic production, and enhancing energy security by reducing oil imports. While we’ve heard those arguments here for many years, China imported 52 percent of its oil in 2008, and if the country didn’t push EVs during the rapid expansion of the auto industry, that dependency would only increase. China also has the advantage of building out the grid with EVs in mind as they are adding generation and transmission capacity while the U.S. will seek to accommodate EV demand through gains in efficiency and stressing off-peak charging.

Pike Research doesn’t expect the EV market to substantially cannibalize hybrid sales. The U.S. hybrid market has been strong for years and will remain so, while hybrid sales in China are starting from a small base.

Article by John Gartner, appearing courtesy Matter Network.