INDIANAPOLIS – China expects electric-vehicle sales to hit 500,000 units by the end of 2015, says a top official with the China Association of Automobile Manufacturers at a vehicle summit here.

While that may appear a lofty goal to some industry watchers predicting a slow rollout of the new technology, Ye Shengji, CAAM deputy counsel secretary, says China must be aggressive about vehicle electrification due to concerns over its growing consumption of imported oil.

Many analysts also see increasing global EV competition as a reason for the country’s push.

China’s light-vehicle sales have been spiraling upward for the last decade, and CAAM expects the market to hit the 16 million mark this year, Ye says, toppimg most analysts’ predictions. The forecast is also is 17% ahead of year-ago’s 13.6 million new car and truck deliveries.

However, oil-supply issues, stricter emissions guidelines and the increased cost of raw materials, such as copper and rubber, threaten long-term growth, he says.

Ye tells attendees at the recent U.S.-China Advanced Technology Vehicle Summit here China imported 41% of its oil in 2005, rising to52% in 2009, when for the first time imports reportedly exceeded domestic production. By 2030, expectations are China will import 70% of the oil it consumes.

“This will place a severe challenge for the Chinese auto industry,” Ye says. “(EVs) are an inevitable trend.”

The goal to sell 500,000 EVs by 2015 was reached in March at a meeting of China’s top-10 auto makers, which also predict EVs and hybrids will account for 30% of the industry’s annual output in the same timeframe.

“China has mastered pure EVs matching an international standard,” Ye says, making a similar claim about China’s hybrid electric vehicles without explaining what standard CAAM is using.

The Chinese auto industry intends to increase research and development spending for what he calls “energy-saving” vehicles; intends to market the vehicles; “gradually push forward” the industrialization of small passenger cars and hybrid buses; and focus on longer-term battery R&D, recycling and reuse.

China’s aggressive goals sound plausible to Remy Inc. President Jay Pittas, whose company recently met with the U.S. Department of Energy to finalize a $60.2 million grant allowing it to accelerate standardization and commercialization of its Remy High Voltage Hairpin electric-motor technology in North America.

“When they decide to do something, they do it,” Pittas says of the Chinese in an interview on the sidelines of the conference. “(China is) building a river from the Tibetan mountains to Beijing,” he cites as an example. “They’re building a river! And they’re doing it in five years.

“Regardless of what the economics look like,” Pittas believes China will drive production of electrified vehicles to 30% by 2015 due to a desire for technological leadership in light of its fleeting position as the world’s low-cost manufacturing center.

China currently represents 15% of Remy’s global sales of starters, alternators and hybrid motors, he says. The company has both wholly owned and joint-venture operations in the country and sells to domestic and JV light-vehicle and heavy-duty truck makers.

Pittas says Remy is looking to grow sales of its hybrid motors to Chinese auto makers and currently supplies a starter/alternator for Chery Automobile Co. Ltd.’s mild hybrid taxi.

“My personal opinion is the Chinese are viewing the electric vehicle as a very important strategic spot for them, because they realize they are never going to be the technological leader in diesel engines or internal-combustion gasoline engines,” he says.

“They clearly see a more level playing field with electric vehicles, because we’re all at the same starting point. And they’re willing to put huge amounts of resources to make themselves leaders in electric vehicles.”

As anticipated, China’s Ministry of Finance announced June 1 the central government will subsidize battery-powered cars and plug-in HEVs on a trial basis, aimed at keeping the country competitive with global developments in the segment.

Dealers reportedly are offering consumers a RMB3,000 ($439) spiff. But the biggest enticement goes to auto makers, which can receive up to RMB60,000 ($8,785) per electrified vehicle, with only EVs eligible for the maximum amount.

However, the enticement is available only to car companies in five Chinese cities: Changchun, Hangzhou, Hefei, Shanghai and Shenzhen. All are home to major OEMs, including General Motors Co.’s partner Shanghai Automotive Industry Corp. and battery-maker BYD Auto Co. Ltd., which recently sealed a deal with Daimler AG to develop EVs in China.

Nissan Motor Co. Ltd. CEO Carlos Ghosn told Detroit media last week he expects China to become the world’s largest EV market due to government incentives. The auto maker plans to debut its Leaf EV in the U.S. later this year, with a Chinese rollout reportedly set for 2011, when the car will go into government fleets.

But because the Leaf will be imported from Japan, it likely won’t qualify for China’s sales incentives, a move that could prompt the auto maker to build the car locally.

cschweinsberg@wardsauto.com