The rising number of cars on China's roads combined with the tightening oil supply and environmental constraints means now is the right time for China to develop new-energy cars which, if done correctly, could see the country become a global leader in the field.

The Development Research Center of the State Council predicted that oil consumption by automobiles in China will jump to 265 million tons in 2020, accounting for 67 percent of China's total oil consumption. This casts a big shadow over the sustainability of China's auto market, and is a contributor to the country's drive to secure more oil supply.

Motorists in China are already getting a sense of their vulnerability to oil prices, which have gone up from around $40 per barrel in 2008 to about $100 per barrel currently.

These factors all mean the time is ripe for a major push in the development of electric cars.

At present, there is no large technological gap between China and developed countries in terms of electric vehicles, as each party began development at around the same time. The problems faced are also universal, such as battery capacity and charging facilities.

As such, China's huge emerging vehicle market will provide the electric vehicle sector with extensive space for development.

However, China needs to tackle the following problems before achieving sustainable development in the sector.

Developing the technology requires vast financial and labor input. This also means that, in the early stages at least, the retail price of vehicles is very high. The government should offer favorable policies for both manufacturers and consumers, such as subsidies, to support the industry until it reaches a viable scale.

However, the truth is that China's R&D input remains lower than the average of developed economies, which is illustrated by the shortage of relevant talent in the country, and the lower salaries paid by Chinese technology developers compared to their overseas counterparts.

China should also work hard to strengthen intellectual property right regulations in a bid to encourage homegrown technological improvement.

Many of China's local governments have earmarked the electric vehicle sector as a new engine for economic growth. However, their efforts focus too much on vehicle production, while they neglect the development of supporting infrastructure. Under such circumstances, their efforts will be in vain. The development of vehicle charging stations should be made a priority.

China's electricity generation is another bottleneck for the electric vehicle sector, and will be increasingly so as the sector grows. The electricity used to power vehicles will, in large part, come from China's coal power plants. This in turn depends on China's coal supply keeping pace with demand.

Also, under the government-controlled electricity pricing mechanism, the retail price of electricity is kept low without regards to the economic losses suffered by power plants due to soaring coal prices. This discourages power plants from sustaining sufficient production. This system needs reform if the growing demands for electricity from electric vehicles are to be met.

The government should subsidize power plants to ensure sufficient output, and grid companies should coordinate with local governments to actively participate in the establishment of electric vehicle charging facilities.