China has been the largest vehicle producer and consumer country in the world nowadays. In order to face environmental crisis and keep environmental sustainability, China is switching its national strategy direction of new energy vehicle industry from expand gasoline vehicle to develop electric and plug-in hybrid electric vehicle. This paper described the present condition of new energy vehicle industry in China and discussed the significant new energy vehicle industry policy mechanism changes in the form of technical standards, state subsidies and infrastructure construction. From 1991 to 2000 was the embryonic stage of technological research in China, focused on electric vehicle and components. During 2001 to 2009, "three vertical and three horizontal" was the main technological innovation strategy. Since 2009, technological develop focus was back to electric vehicle and put forward progress of the market.