China penalizes 5 automakers for violating EV subsidy program
China's Ministry of Finance said five domestic automakers had violated the rules of its electric vehicle and plug-in hybrid program by receiving roughly 1 billion yuan ($150 million) in illegal subsidies.
The companies cited by the government primarily make buses and include a subsidiary of Chery Holding, owner of the seventh most popular Chinese passenger car brand.
The ministry said it would revoke the production license of Suzhou Gemsea Coach Manufacturing, while the other four firms would be fined the equivalent of 50 percent of subsidies they wrongly received.
The ministry also said it would try to recover any awards that had been obtained illegally.
The Chinese government has used subsidies and sales targets to promote EV and plug-in hybrid vehicles, helping deliveries to quadruple last year.
China spent 30 billion yuan last year in subsidies for such vehicles, although it is set to gradually phase out the payments by 2021.
The investigation is another blow to China's efforts to generate annual sales of 700,000 new energy vehicles, Chinese shorthand for EV and plug-in hybrids, said Yale Zhang, managing director of consultancy Automotive Foresight.
Only 215,000 such vehicles were sold in the first seven months of the year, according to China's automakers association.
The ministry said Suzhou Gemsea fabricated virtually its entire EV manufacturing and sales operations. The company forged sales and manufacturing certificates and licenses for the vehicles.
"Individual companies seeking profit, violated relevant laws to cheat and fraudulently obtain financial subsidies, seriously disrupting the market order, violating the legitimate interests of firms that honor the law in researching, developing and manufacturing new energy vehicles," the government said in a statement.
Suzhou Gemsea could not immediately be reached for comment.
Chery Wanda Guizhou Bus, King Long United Auto Industry, Shenzhen Wuzhoulong Motors, and Henan Shaolin Bus claimed subsidies for vehicles they had not finished building, the ministry said.
Shaolin Bus declined to comment, while the other companies could not immediately be reached for comment.
The finance ministry laid out penalties for other potential violations of policies but did give names of other companies alleged to have wrongfully obtained subsidies. The ministry inspected 90 companies in total.
The ministry said it would revoke the production license of Suzhou Gemsea Coach Manufacturing, while the other four firms would be fined the equivalent of 50 percent of subsidies they wrongly received.
The ministry also said it would try to recover any awards that had been obtained illegally.
The Chinese government has used subsidies and sales targets to promote EV and plug-in hybrid vehicles, helping deliveries to quadruple last year.
China spent 30 billion yuan last year in subsidies for such vehicles, although it is set to gradually phase out the payments by 2021.
The investigation is another blow to China's efforts to generate annual sales of 700,000 new energy vehicles, Chinese shorthand for EV and plug-in hybrids, said Yale Zhang, managing director of consultancy Automotive Foresight.
Only 215,000 such vehicles were sold in the first seven months of the year, according to China's automakers association.
The ministry said Suzhou Gemsea fabricated virtually its entire EV manufacturing and sales operations. The company forged sales and manufacturing certificates and licenses for the vehicles.
"Individual companies seeking profit, violated relevant laws to cheat and fraudulently obtain financial subsidies, seriously disrupting the market order, violating the legitimate interests of firms that honor the law in researching, developing and manufacturing new energy vehicles," the government said in a statement.
Suzhou Gemsea could not immediately be reached for comment.
Chery Wanda Guizhou Bus, King Long United Auto Industry, Shenzhen Wuzhoulong Motors, and Henan Shaolin Bus claimed subsidies for vehicles they had not finished building, the ministry said.
Shaolin Bus declined to comment, while the other companies could not immediately be reached for comment.
The finance ministry laid out penalties for other potential violations of policies but did give names of other companies alleged to have wrongfully obtained subsidies. The ministry inspected 90 companies in total.
