Industry executives and government policymakers in China

Industry executives and government policymakers in China seem generally to agree on the need for China to encourage the shift to more economical and cleaner vehicles like electric-battery cars, and on the benefits that might bring along – including a chance for Chinese auto upstarts to close the technological gap with more established global auto makers.

Associated Press

Nissan CEO Carlos Ghosn says the company has no plans to make pure-electric cars in China

But so far it’s unclear whether China’s central government is ready to roll out consumer incentives to spur sales of electric cars.

Is that reluctance (or indecision) causing car companies to slow down and withhold investment in new electric car projects?

That’s one way to read comments by Nissan Motor CEO Carlos Ghosn in Beijing last week. Ghosn outlined Nissan’s plans for promoting electric vehicles, centered on its all-electric battery car the Leaf, which it plans to start production of in Japan next year. Nissan plans to start making the Leaf available to corporate and government fleet customers in the U.S., Japan and Europe during the second half of 2010, and to start producing it in the U.S. in 2012.

Senior Nissan executives in China say the company has been considering producing the Leaf and other future electric cars in China, along with the bulky, heavy lithium-ion batteries that power such vehicles.

But Ghosn said Nissan has no plans to produce pure-electric cars in China, where the Leaf is expected to start a test launch with government agencies and other fleet customers in the city of Wuhan in 2011. Ghosn didn’t rule out producing electric cars in China in the future, but he said the decision depends on China’s demand for all-electric cars. The upshot: even as China is poised to surpass the U.S. and become the world’s biggest car market this year, Nissan isn’t sure if China has the same kind of appetite for electric cars that it foresees in the U.S., Japan and Europe.

Ghosn didn’t specifically cite the lack of government incentives so far for private purchases of greens cars in China as a reason for Nissan’s reluctance.

But at least one other auto exec has been more explicit on that point in public: Wang Chuanfu, head of China’s BYD Co., one of China’s leading makers of electric vehicles. At a September conference, Wang urged the Chinese government to subsidize private purchases of all-electric battery cars and other “new energy” vehicles, saying their widespread adoption in China depends on it.

A senior official at the National Development and Reform Commission, Chen Jianguo, speaking at the same conference, pointed to reservations among some officials about providing incentives for electric-car sales, since the subsidies or rebates would likely go mainly to wealthy private buyers.

It will be interesting to see how that debate is resolved, but, in the meantime, one wonders if China may start to miss out on EV investment.