An industrial policy for electric vehicles

Electric car manufacturers beware! China is putting aside USD 16 billion to develop and commercialize electric cars for the next 10 years. The expected output? 2.5 million all-electric cars and another 2.5 million hybrids – in 2010 14 million cars were sold in Europe and 18 million in China.

In good old fashion the massive effort to build an indigenous electric car industry will be led by the Ministry of Industry and Information Technology and include both “hardware” (i.e., support to manufacturing, roll-out of basic infrastructure and pilot experiments) and “software” (i.e., financial stimulus including tax breaks and subsidies).

So far China’s electric cars are nowhere to be seen. But, with the help of industrial policy, the country may well put itself in the position to kick-start a promising industry, provided someone solves the issue of electricity production…