China: Government policies boost natural gas commercial vehicle market

China: Government policies boost natural gas commercial vehicle market

An improved economy, infrastructure development and government subsidies are contributing positively to the Chinese compressed and liquefied natural gas commercial vehicle market.

Since the implementation of the new energy resource policy by the Department of Science and Technology and State Environmental Protection Administration, prospects for natural gas commercial vehicle manufacturers are on the rise.

“The central government is promoting green transportation in more than 100 cities within China, and every regional government is adapting and coordinating accordingly,” said Frost and Sullivan Automotive and Transportation research associate, Ming Lih Chan.

“In fact, Shanghai, Chengdu, Xinjiang and Hebei have already replaced more than 85 percent of their existing fleets with natural gas buses.”

Although the sales volumes for LNG commercial vehicles stood at 78,200 units in 2013, Frost and Sullivan estimates this to reach 246,000 units by 2020 at a compound annual growth rate of 17.8 %.

However, the supply of natural gas and components of automobiles that use this fuel continues to be limited. Main issues revolve around the geological structure of the country and technical problems surrounding energy supply, quality control and assurance of the fuel.

As a result, many fleets are operating in markedly tight conditions in order to keep up with the government’s natural gas infrastructure plan. This, along with the high cost of technology components in commercial vehicles act as major deterrents to expanded usage.

Poor consumer perception of natural gas technology and the lack of filling stations in the country have also set back the market.

Nevertheless, the improving performance of gas commercial vehicles and an expected increase in the number of filling stations from the 4,000 in 2013 to 18,000 by 2020, will do away with the initial apprehensions.

“Natural gas supply shortages are also set to become a thing of the past due to the large shale gas reserve base in China,” pointed out Chan. “Not only will this boost the value proposition of commercial vehicles, but it will bring down gas prices.”

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