China's top carmaker earmarks $879m for green car development

SAIC Motor Corp, China's largest carmaker, has said it plans to invest $879m (£531m) over the next two years to develop and manufacture eco-friendly vehicles.

The amount will be split equally into three areas: research and development, component manufacturing and construction of auto manufacturing facilities, SAIC chairman Hu Maoyuan told state-owned Xinhua news service earlier this week.

The carmaker plans to launch the Roewe 750, a hybrid sedan based on the UK's Rover 75, in China next year. An all-electric model, the Roewe 550 is slated to follow in 2012, according to local media reports.

At the Shanghai Motor Show in April, SAIC displayed a prototype fuel cell-powered sedan based on the Roewe 750. Developed in partnership with the automotive engineering school of Shanghai's Tongji University, it is thought to be the only hydrogen fuel cell car made in China. A launch date for the vehicle has not yet been announced.

"Fuel-efficient and [alternative] energy vehicles should account for 10 per cent of the total [auto] industry in 2012," science and technology minister Wang Gang told state-run China Daily newspaper last month.

At least seven Chinese automakers have announced plans to develop hybrid and electric vehicles this year. The move is intended to help them to compete with green car imports made by global rivals, particularly from neighbouring Japan.

However, the market for eco-friendly cars is still in its infancy, with only 889 units of Toyota's hybrid Prius sold in China last year, according to the National Passenger Car Information Exchange Association. It is a miniscule share of the 9.3 million autos sold domestically in 2008.

One major obstacle is the lack of a car battery recharging infrastructure. Oil giant China National Offshore Oil Corp this week said it was considering undertaking the task of setting up a national recharging network for electric cars, as it seeks to break into the green car market.