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The NY Times has a front page story about an edict from “the very top of the Chinese government” to transform China into the world leader in electric cars in the next few years.
China wants to raise its annual production capacity to 500,000 hybrid or all-electric cars and buses by the end of 2011, from 2,100 last year, government officials and Chinese auto executives said. By comparison, CSM Worldwide, a consulting firm that does forecasts for automakers, predicts that Japan and South Korea together will be producing 1.1 million hybrid or all-electric light vehicles by then and North America will be making 267,000.
China’s intention, in addition to creating a world-leading industry that will produce jobs and exports, is to reduce urban pollution and decrease its dependence on oil, which comes from the Mideast and travels over sea routes controlled by the United States Navy.
A report by McKinsey & Company last autumn estimated that replacing a gasoline-powered car with a similar-size electric car in China would reduce greenhouse emissions by only 19 percent. It would reduce urban pollution, however, by shifting the source of smog from car exhaust pipes to power plants, which are often located outside cities.
Beyond manufacturing, subsidies of up to $8,800 are being offered to taxi fleets and local government agencies in 13 Chinese cities for each hybrid or all-electric vehicle they purchase. Tax subsidies for consumers are in the offing as well.The state electricity grid has been ordered to set up electric car charging stations in Beijing, Shanghai and Tianjin.
Looks like the electric car is becoming a reality, sooner than we expected.
Any thoughts on which stocks are best positioned to cash in? What is the impact on oil prices 5 years out?
