Manufacturing News

EV sales cool after government crackdown on fraud

A government crackdown on fraud has slammed the brakes on China's fast-growing market for electrified vehicles.

Deliveries of electric vehicles and plug-in hybrids in China rose 6 percent year on year to 65,000 vehicles in November, according to the China Association of Automobile Manufacturers.

Last month's results mark a sharp slowdown from the dizzying growth rate earlier this year. For the first 11 months, China's electrified vehicle sales jumped 60 percent to 402,000 vehicles.

Of that number, battery-electric vehicle sales surged 78 percent to 316,000 units, while deliveries of plug-in hybrids increased 18 percent to 86,000 vehicles.

The electrified-vehicle market's growth rate cooled sharply after the central government investigated fraud allegations that involved a number of manufacturers.

Hefty fines
After a nine-month probe, the government in September started punishing companies that inflated sales or sold substandard vehicles to obtain bigger electrified-vehicle subsidies.

To date, the government has announced penalties for six electric bus makers and one light-vehicle manufacturer, Lifan Industry Co.

The six bus makers received hefty fines. Among them, Suzhou Gemsea Coach Manufacturing Co. lost its production license and three of its executives are to go on trial.

Lifan lost the right to claim subsidies for electrified vehicles in 2015 and 2016.

November's sales results also revealed a sharp discrepancy in demand for battery-electric vehicles and plug-in hybrids.

Weak hybrid sales
Last month, automakers delivered 58,000 battery-electric vehicles in China, a jump of 27 percent from a year earlier. But deliveries of plug-in hybrids dropped for the third consecutive month, slumping 57 percent to 7,000 vehicles in November.

The manufacturers association did not offer an explanation for recent weak demand for plug-in hybrids. But according to, a Beijing-based website covering China's electrified-vehicle market, the main reason plug-in hybrid sales lost steam is that Shanghai pared its subsidies for BYD Co., China's largest plug-in hybrid maker.

Shanghai was BYD's largest urban market for plug-in hybrids in 2015.

But in the first eight months of this year, Shanghai's city government cut subsidies twice for plug-in hybrids, slashing subsidies for BYD's plug-in hybrids to 5,000 yuan ($725), down from 30,000 yuan last year.

Only EVs, plug-in hybrids and fuel cell cars assembled in China are eligible for government subsidies. Conventional hybrids do not qualify. No fuel cell vehicles have arrived in the market.

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