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BUSINESS & TECH

Guangdong Rolls Out Massive Electric Bus Upgrade

By Wang Jing and Yang Ge

(Beijing) — Three of the four largest cities in affluent Guangdong province will upgrade their entire public-bus fleets to electric-powered vehicles by 2020 — part of an ambitious plan to make three-quarters of all provincial public buses powered by clean energy over the next five years.

The provincial capital of Guangzhou, along with the adjacent city of Foshan and the boomtown of Shenzhen, which borders Hong Kong, lie at the heart of the determined upgrade, which is part of the province’s Five-Year Plan that runs from 2016 to 2020. China has been aggressively promoting new-energy vehicles over the last five years in a bid to clean up the nation’s polluted air and develop cutting-edge technologies that can be exported.

Under the recently revealed provincial plan, Shenzhen will be the first to convert its entire public-bus fleet to electric powered vehicles by 2018. Guangzhou will follow a year later, and Foshan will complete its conversion by 2020.

The three cities lie at the heart of the Pearl River Delta, one of China’s most affluent areas and home to many of its earliest foreign joint ventures due to its open economic policies and proximity to Hong Kong.

Upgrades by those three cities should help the province reach targets of new-energy buses comprising 85% and 75% of the total in the Pearl Delta and all of Guangdong respectively by 2020.

Public buses now account for about 1.3% of all vehicles in China, according to publicly available statistics. But because they use more fuel and are driven more frequently than ordinary cars, they account for 30% of all vehicle emissions.

At the same time, Beijing has been rapidly reducing its incentives for clean-energy vehicle developers in the last year, partly to encourage the industry to be more commercially viable and also to overhaul a system that had become rife with fraud as companies and individuals chase generous government subsidies.

A previous combination of central government and locally matching subsidies gave buyers up to 1 million yuan ($146,000) in subsidies for each electric bus purchased, in a program dating back to 2013. But under adjustments made at the end of last year, subsidy levels were reduced to about half that amount.

Pending changes to the subsidy program also sent a chill through the new-energy car market in January, with sales plunging 74% for the month to just 5,682 units as dealers and potential buyers waited on the sidelines for clarity on new policies. Manufacturers were told at the end of last year that all vehicles would be re-evaluated for inclusion in a catalog of models eligible for subsidies going forward. But the revised catalog, which previously covered 2,193 models from 235 producers, has yet to be published, leaving the industry in limbo.

Contact writer: Yang Ge (geyang@caixin.com)

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