SHANGHAI, Nov. 5, 2009 (Xinhua News Agency) -- The development of new-energy vehicles has become a world trend. China is also keen on new-energy vehicle development, but is facing a lot of challenges, said Xiao Guopu, vice president of SAIC Motor (600104.SH), at an international energy (OOTC:ILGL) saving forum.

Xiao suggested the country to pay attention to the following five issues in development of new-energy vehicle industry.

First, the development of new-energy vehicles needs effective policy support from the government. China provides subsidies for purchases of new-energy vehicles, as many countries do, in hopes of expanding new-energy vehicle use, but there are restrictions. The subsidy program only applies to 13 designated cities, and is mainly for commercial vehicles. That is one of the reasons for sluggish new-energy vehicle sales in China.

Secondly, China still lags behind developed countries in the development of key technologies.

Thirdly, most of the key parts of Chinese new-energy vehicles are purchased from original equipment manufacturers (OEMs). China has few companies supplying new-energy vehicle parts, and it costs too much for automakers to manufacture parts by themselves.

Fourthly, China also needs to put more effort into the construction of auxiliary facilities. New-energy vehicle garages should be equipped with charging units. Related government departments need to lay down unified standards on charging devices and electric current strength.

Fifth and last, China still has to cut the running costs of new-energy vehicles. New-energy vehicles are much more expensive than traditional vehicles at present. For example, one new-energy vehicle that SAIC Motor displayed at the 2010 Shanghai Expo costs 2 million yuan, expensive in comparison with about 1.2 million yuan for a conventional bus.