Step aside, Japan. Don’t even try, Detroit. China has plans to corner the electric car market.

From the New York Times:

TIANJIN, China — Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that.

As it stands now…

Japan and the United States currently lead the world in gas-powered vechicle technology. Japan, additionally, ranks first in hybrids, which run on both electricity and gasoline, with cars like the Toyota Prius and Honda Insight.

What is China’s plan for electric car domination?

China’s hoping to leapfrog its competitors by adopting new technology and raising its “annual production capacity to 500,000 hybrid or all-electric cars and buses by the end of 2011, from 2,100 last year.”

Plus, the government plans to dole out rewards to encourage the purchase of hybrid or all-electric cars. Taxi fleets and local government agencies in 13 Chinese cities can earn up to $8,800 in subsidies for each vehicle they purhcase. And consumers may also soon receive tax credits if they buy “alternative energy” vehicles.

By boosting production (and purchase) of electric and hyprid cars, China aims to stimulate its economy, reduce urban air pollution and decrease its dependence on oil.

The advantages of China going electric:

• Electric cars are well-suited to short, low-speed commutes, which are common in Chinese cities.
• First-time car buyers, who make up most of the market, aren’t loyal to gas-powered cars, yet, so they’re more easily persuaded to adopt electric car technology.

The obstacles:

Smog will persist. Seventy-five percent of China’s electricity comes from coal, which produces more pollution and greenhouse gases than other fuels.

A report by McKinsey & Company last autumn estimated that replacing a gasoline-powered car with a similar-size electric car in China would reduce greenhouse emissions by only 19 percent. It would reduce urban pollution, however, by shifting the source of smog from car exhaust pipes to power plants, which are often located outside cities.

Urban dwellers will find electric cars inconvenient. Since most urban Chinese live in apartments, they cannot re-charge their car batteries in their own driveways, so the government will have to set up public charging stations.

Chinese consumers are wary of rechargeable lithium-ion batteries. Some counterfeit batteries used in cellphones and laptops have caught on fire, or worse, exploded and caused injuries. Even though the types of batteries used in cars are more “chemically stable,” it will be hard to convince consumers of their safety.

Lithium-ion batteries are expensive. Gas is still relatively cheap. Why would thrifty Chinese consumers spend more on an electric car?