BEIJING: Only around 1% of the 24m new cars sold in China last year were electric or plug-in hybrids, but that could be set to change as government subsidies are beginning to alter the outlook of both industry and consumers.
Around 331,000 electric/hybrid vehicles were sold in 2015 but that was a fourfold increase on the previous 12 months, AFP reported.
"Pollution levels mean the government has no other choice" than to encourage the development of new energy vehicles, according to Jean-Francois Belorgey, an auto industry expert at Ernst & Young.
"If China gets moving on electric cars then that would automatically lower prices and have a favourable ripple effect across the whole world," he added.
The government wants 5m "green" vehicles on the road by 2020, and is now offering subsidies of up to 55,000 yuan ($8,400) for buyers of zero- or low-emission Chinese-brands, which are often matched by local authorities.
As well as the immediate financial benefit to purchasers, they are also able to avoid driving restrictions imposed by city authorities on days when the smog is particularly bad.
With political backing for such vehicles, Chinese firms are rapidly adjusting their portfolios. Geely, which owns Volvo, has announced its intention of shifting 90% of its sales to hybrid and electric vehicles by 2020.
Foreign brands have also spotted an angle, with several now seeing China as a test market for low-cost electric vehicles that can be sold around the world.
Only last week Renault opened its first Chinese factory in Wuhan and will start to produce electric cars there as early as next year.
"If we can succeed in China we can succeed elsewhere," said Carlos Ghosn, chief executive of Renault.
Chinese cities regularly suffer from a pollution haze – the result of coal-burning power stations and vehicle exhausts – and many people now wear respiratory face masks in an effort to mitigate the effects of pollution.
One study estimated that outdoor air pollution had contributed to 1.2m premature deaths in China in 2010.
Data sourced from AFP; additional content by Warc staff