China's emissions paradox

Heads: The Chinese government is pressuring automakers to improve energy efficiency, by demanding that automakers produce electric and hybrid (gasoline-electric) cars.

Tails: Chinese government price controls on gas are spurring interest in large SUVs and luxury cars. This trend is also being driven by rising incomes for China's elite.

China is already the world's second largest car market, with 8.8 million units sold in 2007, 10 million expected for 2008, and double-digit growth projected for the next five years. China is also the world's second largest oil consumer.

And of course, automakers go with what the market wants. Though some manufacturers, like Daimler, GM and local BYD are showing electric and hybrid prototypes at the Beijing Auto Show, the models truly being focused on are of the gas-guzzling variety.

"... many auto executives are skeptical that Chinese consumers will be willing to pay considerably more for cars with hybrid engines... while hybrids still account for less than one percent of the far more affluent American market. So unless the government heavily subsidizes vehicles with new technologies, their sales may be limited along with their effect on oil imports and emissions of global warming gases."

And the NYT finally points out the paradox:

"... price controls on fuel have had the effect of stimulating sales of big vehicles, despite other government policies intended to discourage such sales. Liu Shijin, a vice minister for the powerful State Council Development and Research Center, acknowledged Thursday that the government had missed a chance to raise fuel taxes earlier in this decade and now faced a difficult decision on what to do in the face of inflation. "If the fuel is priced right, consumers will use energy more carefully,” Mr. Liu said at the conference."

Tags: emissions, electric cars, hybrids, BYD, BYD Auto, automotive, auto industry, automotive industry, China, Chinese auto industry, Chinese automotive industry

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