Second, Chinese automakers have little incentive to focus on electric vehicles because the sales are not even enough for them to install a separate production line. They are reluctant to spend their hard-earned profits on the research and development of electric vehicles.

To quickly upscale the market, the government needs to prioritize promoting electric vehicle use in commercial operations that rely on large numbers of vehicles, such as car-rental and car-sharing services, business distribution networks, taxi in city centers, and official government vehicles rather than continue to depend on individual consumers' market, which will not take off until technology breakthrough overcomes the range and charging barriers. Public procurement and corporate fleet orders is key to the early electric vehicle market's success.

Third, the government is spending a lot of resources to heavily subsidize the purchase of electric vehicles, while the lack of infrastructure and incentives to use that is the major barrier for electric vehicles in the current high-end niche market.

The government needs to create an environment that encourages electric vehicle use, including building the necessary infrastructure and providing incentives to use rather than purchase electric vehicles, such as exemption from Beijing's registration plate lottery and travel limitation, creating priority lanes and exclusive parking spaces in public places with charging posts. This also needs to be better integrated with ongoing urbanization and the entire transportation system.

Fourth, setting a sales target is important for electric vehicles, but it also risks locking the country in less advanced technologies especially when technology evolves quickly in this sector. Without a self-sustaining business model, high stock could damage the industry's long-term survival once subsidies are withdrawn. China's solar-panel industry paid a heavy price to learn this lesson, which should not be repeated for electric vehicles.

So China should shift from setting sales numbers to emphasizing the development of a self-sustaining business model for electric vehicles. The government needs to periodically review the performance of the pilot cities and reward those with better business models, so when there is a need to scale up in the future, the sector could support itself instead of relying on the government.

Nurturing a new, globally competitive industry requires more than just political will. China needs to learn from these lessons to refocus its efforts on measures that improve both the users' experience and the business environment for electric vehicles' success.

The author is a resident scholar in the Energy and Climate Program based at the Carnegie-Tsinghua Center for Global Policy.

(China Daily 09/13/2013 page9)