Residents of Shanghai, Shenzhen, Changchun, Hangzhou and Hefei would receive up to 50,000 Yuan ($7,320) in subsidies if they buy plug-in hybrid cars. The maximum subsidy for those who bought fully electric cars was 60,000 Yuan ($8,784), according to a statement on the Chinese Ministry of Finance website.
In addition to the new program limited to the five specified cities, China would also offer nationwide subsidies of 3,000 Yuan ($440) on purchases of cars with 1.6-liter engines or smaller and that consume 20 percent less fuel than current standards.
The cities are locations of headquarters for major automakers.
Shanghai Automotive Industrial Corp. is a partner of General Motors Co. and Volkswagen AG. Changchun is the base for FAW Group, another big state-owned automaker. Shenzhen is home to BYD Auto, a leader in electric vehicle development, while Hangzhou is the base of Zhejiang Geely Holding Group, which recently purchased Sweden’s Volvo Cars from Ford Motor Co. Hefei is the provincial capital of Anhui, where automaker Chery Automobile is based.
China aims to increase annual production capacity of alternative-energy vehicles to half a million units by 2011 to help cut reliance on oil imports and improve air quality.