Beijing Auto's green car unit plans IPO in 2018

Yawen Chen and Jake Spring

* Beijing EV will be profitable next year at latest

* State-owned automaker to give employees shares

* Electric vehicle battery costs rapidly declining

(Adds quote, details)

BEIJING, March 6 (Reuters) - The green energy car subsidiary

of Chinese automaker Beijing Automotive Group plans

an initial public offering in 2018, Chairman Xu Heyi said on

Monday, adding that the unit should be profitable that year.

China has aggressively promoted battery electric and plug-in

hybrid cars, including spending billions of dollars in

subsidies, in an effort to cut heavy urban smog and promote

technological innovation in its auto sector.

Xu said battery production costs for Beijing Electric

Vehicle Co, which is backed by the group's listed subsidiary

BAIC Motor Corp, are dropping by 15-20 percent per


Its battery costs have more than halved to 1,500 yuan to

2,000 yuan ($215-$290) per unit in the last three or four years,

he said, and will soon be near 1,000 yuan per unit.

While the central government is phasing out green car

subsidies through 2020, the firm will need government support

for only three more years at most, said Xu, who is a delegate to

China's parliament, on the sidelines of the legislative session

that runs until March 15.

"People are wondering, at the end of 2020 when overall

government financial support will end, will the new energy

vehicle industry fall off a cliff?" Xu said.

"There is no chance that will happen."

China's state-owned regulator has given Beijing EV approval

to allot shares to certain management and technical employees as

part of government moves to introduce mixed ownership to

state-owned firms like Beijing Auto.

($1 = 6.8950 Chinese yuan renminbi)

(Reporting by Yawen Chen and Jake Spring; Editing by Ruth