As China grows richer, electricity demand will rise. Given that China's urbanites are buying cars and that China is a net importer of oil, it appears to be a reasonable home market strategy for China's powerful state to nudge forward the production of electric cars. As this article discusses, the grid operators in China anticipate that the rise of the electric car will further increase the demand for their services.
From an environmentalist's standpoint, they must "pick their poison". From a carbon mitigation perspective, do they prefer Chinese cars to run on oil (and hence bid up the price of world oil and this may trigger innovation for more fuel efficient vehicles) or for Chinese cars to run on electricity generated by dirty coal fired power plants? Of course, the greens will prefer that the cars run on electricity created by renewables but we haven't reached that point on the cost curves yet.
With several co-authors, I recently published a paper on Chinese urbanite resource consumption using their 2006 National Survey. For a copy of the paper, click here. This paper was published in the Journal of Economic Geography in 2011.