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February 6, 2009, 07:52 – Source: China Securities Journal. Maximum subsidy of 600,000 yuan per new energy bus. Following the announcement that pilot programs for the promotion of energy-saving and new energy vehicles would be carried out in 13 cities including Beijing, the Ministry of Finance issued further guidelines specifying who is eligible for subsidies from the central government as well as the criteria for such subsidies. The highest subsidy amount is available for fuel cell buses with a maximum power output of over 50%; such buses can receive a subsidy of 600,000 yuan each for promotion purposes. Maximum subsidies for fuel cell vehicles The Ministry of Finance and the Ministry of Science and Technology have decided to carry out pilot programs for the promotion of energy-saving and new energy vehicles in 13 cities, including Beijing, Shanghai, Chongqing, Changchun, Dalian, Hangzhou, Jinan, Wuhan, Shenzhen, Hefei, Changsha, Kunming, and Nanchang. Through fiscal policies, these programs aim to encourage the use of energy-saving and new energy vehicles in public service sectors such as public transportation, taxis, government vehicles, waste management, and postal services; subsidies are provided to organizations that purchase such vehicles. Among them, the central government provides one-time fixed-amount subsidies primarily for the purchase of energy-saving and new energy vehicles, while local governments offer subsidies mainly for the construction and maintenance of related supporting facilities. The Ministry of Finance has recently issued a document specifying the source of these subsidy funds; the central government will allocate funds from the special account for energy conservation and emission reduction to support the demonstration and promotion of energy-saving and new energy vehicles. The energy-saving and new energy vehicles supported financially this time mainly refer to hybrid vehicles, pure electric vehicles, and fuel cell vehicles. The subsidy rate is primarily determined based on the price difference between energy-saving and new energy vehicles and conventional vehicles of the same type, with appropriate consideration given to factors such as scale effects and technological progress. Specifically, among passenger cars and light commercial vehicles, hybrid vehicles are classified into five tiers based on their fuel savings rate, with a subsidy of up to 50,000 yuan per vehicle for the highest tier ； Each pure electric vehicle is eligible for a subsidy of 60,000 yuan ； A subsidy of 250,000 yuan is provided for each fuel cell vehicle. There are separate standards for urban buses over 10 meters in length. Hybrid vehicles are classified into those using lead-acid batteries and those using nickel-metal hydride or lithium-ion batteries, with maximum subsidy amounts of 80,000 yuan per vehicle for the former and 420,000 yuan per vehicle for the latter ； The subsidy for pure electric vehicles is 500,000 yuan per vehicle ； The subsidy for fuel cell vehicles is up to 600,000 yuan per vehicle. According to officials from Foton Motor, the current price of traditional bus vehicles varies between 300,000 and 800,000 yuan per unit, depending on their configuration, while hybrid buses cost around 1 million to 1.5 million yuan. Taking into account an average purchase subsidy of 300,000 yuan, the actual price of hybrid buses ranges from 700,000 to 1.2 million yuan, which is comparable to the price of high-end configurations of traditional buses. New energy buses will be the first to benefit. The notice from the Ministry of Finance also states that the entities responsible for demonstration and promotion must use bidding processes to select the most suitable energy-saving and new energy vehicles, and they must determine the models, quantities, prices of such vehicles, as well as the after-sales service provisions. Yang Sheng, an analyst at Shanghai Securities, believes that the demand for new energy buses comes primarily from governments at all levels; driven by relevant policies, listed companies are expected to see tangible benefits within about 2 years. In contrast, new energy passenger vehicles are still in their initial stages of development, and it will take some time before industrialization and actual financial results can be achieved. Xu Caihua, an analyst at Guodu Securities, believes that new energy buses will see accelerated industrialization driven by the **\"Ten Cities, Thousand Vehicles\" plan. Among them, Foton Motor is relatively leader in the development of new energy buses. Located in Beijing, it has already received a commitment from the Beijing Public Transport Company for orders of 800 hybrid buses and chassis by 2009, giving it a clear advantage. In addition, the Ministry of Finance has issued regulations stipulating that subsidized vehicle models must be included in the \"Catalogue of Recommended Vehicle Models for the Energy-Saving and New Energy Vehicle Demonstration and Promotion Project.\" For hybrid passenger cars and light commercial vehicles, the fuel savings must be at least 5% compared to conventional models of the same type, while hybrid buses must achieve a fuel savings of at least 10%. Regarding components, manufacturers must provide a warranty period of at least 3 years or 150,000 kilometers for key components such as power batteries. Automobile manufacturers and those that produce key components such as power batteries must have a certain level of production capacity.