quoted from here: http://www.autonewschina.com/en/article.asp?id=7317
SHANGHAI — Over the past year, Beijing has bet heavily on pure electric cars and plug-ins, hoping that these technologies will help domestic automakers to leapfrog their international rivals.
By contrast, conventional hybrid vehicles have gotten short shrift. After all, a Chinese knockoff of the Toyota Prius would not produce the much-desired Great Leap Forward in technology.
But Chinese Premier Wen Jiabao has dropped a pointed hint that the government is losing faith in this strategy.
In a recent article, Wen suggested that Beijing will very likely expand its subsidies for green cars to include vehicles powered by conventional hybrids and fuel cells. Currently, only pure EVs and plug-ins qualify for subsidies.
This bias against fuel cells and hybrids is relatively recent. Before 2010, Chinese officials always included these powertrains in any discussion of green vehicles.
But early last year, Beijing concluded that EVs and plug-ins were its best bet for upgrading China’s know-how.
It has since repeatedly raised the bet. Last summer, Beijing introduced subsidies ranging up to 50,000 yuan ($7,400) for each plug-in and 60,000 yuan for electric vehicles in five major cities.
At Beijing’s request, 16 leading state-owned companies formed an alliance last August to produce electric vehicles, components and battery charging stations. Participants included automakers, oil companies, the telecom industry, electronics manufacturers and electric utilities.
Taking their cue from the central government, provincial and municipal governments pledged additional subsidies.
Meanwhile, a slew of domestic automakers made extravagant claims about the long range and high speeds of their EVs.
All this has conjured up an impression that China is on track to become the world’s EV leader. But is this true, or just an illusion?
It was hard to tell for a long time. But thanks to Wen’s article in the official magazine Qiushi (meaning “seeking the truth” in Chinese), we know it’s an illusion.
In his article about technology development in emerging industries, Wen singles out EVs as a sector in which Chinese companies still lag far behind global companies.
Contrary to their claims, China’s EV manufacturers have made limited progress, Wen wrote. Domestic automakers still import key components and materials to build their electric vehicles.
“EV development in China is still at a preliminary stage, and Chinese companies in general are still exploring the technology and learning it from foreign companies,” Wen added.
Chinese companies have made “some” progress developing plug-in hybrids, but they still trail global rivals, he said. Wen implied that it is premature to exclude fuel cells and conventional hybrids from government subsidy policies.
“Are （plug-in）hybrids and EVs the ultimate products we should pursue in alternative energy vehicle development? We don’t have a definite answer,” he said.
Among senior Chinese government officials, Wen is known for his candid acknowledgment of the major problems facing the Chinese economy and society.
Thanks to him, we now have a better idea about where China stands in EV development. And there is reason to believe Beijing soon will drop its bias against conventional hybrids and fuel-cell vehicles.