Kandi Technolgies Corp (KNDI)

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The Chinese State Council has announced that it is limiting the number of cars allowed on the streets of Beijing, and over the next several years, it plans to discard more than five million vehicles nationwide that fail environmental standards. The news arrives as Beijing parking prices rise up to six figures.

According to Reuters, the new push to replenish the car population of Beijing by discarding clunkers and making the streets more accommodating to electric cars arrives as China reports it is already behind on environmental standards for 2011-2013. Beijing is set to lose at least 330,000 cars, according to a policy report released Monday.

In Beijing specifically, the number of vehicle registrations will also be significantly reduced. The Wall Street Journal reports that Beijing will only be allowed to be home to 6 million vehicles by 2017, and the nation will attempt to cut use of gasoline by 5% by that date. The city will also attempt to attract the use of cleaner electric cars, with the goal of increasing the number of clean energy vehicles in Beijing to 20,000 by 2017. To make it easier for electric and semi-electric cars to traffic in Beijing, the city will also install power-charging posts for 18% of parking units.

The government's initiative arrives as cars continue to increase in popularity in Beijing. Car sales in China increased significantly between March and April; vehicle sales are up 11.6% in April. The Associated Press notes that vehicle sales increased 7.9% in March. Luxury vehicles, in particular, have found a vibrant market in China, as companies like Rolls-Royce host auto exhibitions in Beijing and experience long-term market growth in the area.

The popularity of private car usage has caused a parking crisis in Beijing, a city in which many streets are not designed for parallel parking, and parking garages and similar facilities are limited. The Atlantic's Quartz reports that some parking spots in Beijing are selling for up to $160,000. The prices of parking facilities, even in suburbs, are becoming much higher than the price of buying a car. As author Gwynn Guilford explains, "The frenzy of new car ownership means demand for a place to park far outstrips supply. The city now has 7.5 million drivers—a car for every two or three residents, depending on how you count Beijing’s population."

The new measures may encourage car companies to invest more in advertising electric cars to the growing Chinese car market. Nissan has already targeted a large sector of that market, with its Chinese joint venture firm, Dongfeng Motor Company, announcing that it is seeking to corner 20% of the nation's electric car market.