China is considering providing 100 billion yuan (€412 billion) in government funding to build electric-vehicle (EV) charging facilities and spur demand for clean cars.

Increased state funding would be a tailwind for carmakers coping with consumer concerns over the price, reliability and convenience of EVs.

It would also build on efforts by China, the world's biggest carbon emitter, to fight pollution and cultivate its local EV industry, which includes BYD and Kandi Technologies Group.

"Charging infrastructure and EV growth is a chicken-and- egg situation," said Ashvin Chotai, managing director of researcher Intelligence Automotive Asia. "It's got to be a gradual process to scale up both EV sales as well as charging infrastructure. EVs are still not very attractive when compared with conventional-powered cars."

Among recent government initiatives, China will exempt new-energy vehicles – defined as electric cars, plug-in hybrids and fuel-cell vehicles – from a purchase tax starting next month, and has ordered government departments to buy such vehicles for their official fleets.

Supporting a strategic and emerging industry such as new-energy vehicles is a “win-win” for industrial development and environmental protection, the central government said last month in the statement announcing the waiver of the purchase tax.

Central authorities have set a target for electric cars to make up at least 30 per cent of government vehicle purchases by 2016. The ratio will be raised beyond 2016, when local provinces are required to meet the target.

While sales of electric vehicles in China have lagged behind government targets, BYD, the electric automaker partially owned by Warren Buffett's Berkshire Hathaway, cited favourable government policies for helping the company's new- energy vehicle sales to jump sixfold during the first half.

The government has recently introduced "unprecedented" beneficial policies for EVs, spurred by concerns including energy security and pollution, BYD chairman Wang Chuanfu said last week. There are also a lot of obstacles, among them charging infrastructure, he said in a briefing in Shenzhen to unveil plans for Denza, the joint electric car brand between BYD and Daimler, whose sales will begin this month in Beijing, Shanghai and Shenzhen.

BMW, which plans to sell its electric i3 city car in China this year, has predicted that the country will become the world's largest market for electric vehicles within five years. – (Bloomberg)