China is making the industrialization of pure electric vehicles and plug-in hybrid automobiles the focus of its new plan to develop energy-saving and alternative-energy vehicles by 2020.

The measure, aimed in part at upgrading the auto industry, was adopted by the State Council on Wednesday in the long-awaited industry development plan on energy saving and new-energy vehicles.

The plan proposed for the first time that pure electric vehicles will be the strategic orientation for China to upgrade its big but not yet strong automobile industry. In addition, the industrialization of pure electric and plug-in hybrid vehicles will be the industry priority, along with the wide use of hybrid and energy-saving combustion-engine powered automobiles.

The plan set the target of an accumulative production and sales of 500,000 pure electric and plug-in vehicles by 2015, and more than 5 million by 2020.

It also aimed to lower the average fuel consumption of passenger cars produced in 2015 to 6.9 liters per 100 kilometers, and further to 5 liters per 100 kilometers in 2020.

To achieve this, the government is going to encourage the purchase and use of energy-saving vehicles through subsidies, and accelerate the establishment of charging facilities for the electric vehicles.

"We welcome the plan and the following encouragement policies, as our company has involved more than 200 engineers into the research and development of parts related to electric vehicles," said Chen Yudong, president of Bosch (China) Investment. The German automotive parts supplier will open its fifth research and development center in China this year.

However, Zhong Shi, an independent auto analyst based in Beijing said that the market still has the final say for the industry's future. "Customers' choice is fatal. The vehicles accepted by the customers will lead the industry in the future."

He also said that the government's financial method of supporting electric vehicles is the key to achieving the goals. "Offering low-interest loans for automakers like Obama administration or providing financial subsidies like the central government did in previous years are very different matters," Zhong said.

China has been on the forefront of new-energy vehicles in the recent years, since the government put heavy effort into supporting the sector. Almost all major automakers have set their green car development vision in the world's largest vehicle market.

Last month, Chinese battery and car producer BYD and its German partner Daimler released a new brand of battery-electric vehicles to be produced by their 600-million yuan joint venture, with the first car planned to hit the market in 2013.

SAIC Motor, China's biggest automaker by revenue, expanded its partnership with US giant General Motors last year to develop a production platform for electric vehicles also specific to the Chinese market.

The German automaker Volkswagen also scheduled the launch of its electric version of the Golf compact for 2013, joining the fierce competition in China's rising new-energy vehicle sector.