the development of green vehicles has been too slow

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EDITORIAL : Why green car sales are sluggish

Sunday, Jan 10, 2010, Page 8 Many Taiwanese companies are entering the business of electric car batteries, motors, control systems and auto components, but Yulon Group chairman Kenneth Yen (嚴凱泰) has complained that the development of green vehicles has been too slow.
A key issue to help boost the electric car market is government support. Without it, the goal of achieving a battery-powered age will remain speculative for the foreseeable future.

On Friday, Premier Wu Den-yih (吳敦義) said the government planned to offer tax cuts and cash subsidies to popularize green vehicles over the next six years. He said the government would initially target public transportation, like public buses and taxis, and then general consumers. However, no one should harbor unrealistic expectations of a hefty rebate from the government.

Minister of Economic Affairs Shih Yen-shiang (施顏祥) said on Monday that a rumored cash rebate of NT$500,000 (US$15,680) per car was way too high, after the Chinese-language Economic Daily News reported last month, without naming sources, that the government might provide rebates of between NT$100,000 and NT$500,000 per car.

Shih did not say how much the cash rebates would be, but he did say that the government would announce the entire plan by the end of the month. The message, however, is disappointing because it is precisely higher prices that have frustrated sales of green vehicles in Taiwan and around the world, whether they are hybrids powered by nickel-metal hydride batteries or fully electric cars using lithium-ion batteries.

More vehicles will be made available — either hybrid or all-electric models — as they move to center stage at major auto shows. Still, the warning signal for automakers is that there is no evidence of solid consumer demand for these vehicles, despite rising concerns about oil prices and vehicle emissions that contribute to climate change.

In Taiwan, less than 800 hybrid cars were sold last year, accounting for a mere 0.3 percent of all vehicles sold. In the US, hybrid vehicles secured only 2.7 percent market share of all new vehicles sold there last year, but that figure climbs to 10 percent in Japan — the home market of the world’s best-selling Prius hybrid vehicle — thanks to Japanese government incentives for car buyers, according to industry figures compiled by New Jersey-based Autodata Corp and online news Web site Green Car Congress.

To expand the use of electric cars in Taiwan, the nation must provide well-equipped facilities where motorists are able to recharge their vehicles by plugging into power grids at their convenience.

However, consumers will still make vehicle price their top concern, which makes the government’s subsidy policy the No. 1 factor that can accelerate green vehicle purchases.

Beyond subsidies, something must be done to reduce the cost of batteries, which make up around 40 percent of the cost of an electric car. Either a technological breakthrough or a plan to lease, not buy, batteries could save money and boost sales.

Otherwise, the rate of adoption of electric cars in Taiwan will remain sluggish. It will take a huge energy tax on motorists — which amounts to political suicide — or sky-high oil prices before this market can grow.
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