The numbers might have looked too good to be true. Suzhou Gemsea Coach Manufacturing Co (蘇州吉姆西客車製造), operating out of a blue metal shed west of Shanghai, told the Chinese government that it produced 3,700 electric vehicles last year — almost all of them in one month.
That month was December, the last before the government reduced subsidies it pays makers of electric and hybrid vehicles to help clear some of the world’s smoggiest skies. When inspectors, accompanied by state TV reporters, swarmed the site in Suzhou to verify the numbers, they found a few Gemsea brand vans parked outside and hardly any modern assembly equipment inside.
The investigation casts doubt on the accuracy of reported Chinese electric-vehicle sales that are double those in the US. As the Beijing Auto Show approaches next week, Beijing is examining whether it doled out money for fake transactions by domestic companies.
Photo: AP
Chinese President Xi Jinping’s (習近平) administration wants 5 million “new-energy vehicles” (NEV) — either fully electric or hybrids — hitting roads by 2020 to reduce tailpipe emissions and a reliance on imported oil. Beijing and local governments have spent 15 billion yuan (US$2.3 billion) subsidizing “new-energy” automakers since 2009, according to state-run China Central Television.
The government now plans to phase out the subsidies after 2020 after concluding that the amounts paid to makers of commercial vehicles, in particular, are too high and do not encourage manufacturing efficiency.
Gemsea is a little-known maker of electric vans — both passenger and delivery — stamped with a logo of two dolphins touching their snouts and tails. After applying for subsidies for selling 25 electric vehicles during the first six months of last year, Gemsea reported hundreds of deliveries in the fall and then almost 3,000 in December, according to CCTV.
One client was a wholly owned subsidiary, while another could not verify the delivery numbers reported by Gemsea, the station said in its report broadcast on March 27.
“They have reported fraudulent production and sales numbers and even obtained number plates before production,” Dong Yang (董揚), leader of the investigation by four government ministries, said during the broadcast. “Gemsea did this because they want subsidies.”
Gemsea’s production has been suspended pending the findings by the probe, said a woman who answered the company’s main switchboard.
She declined to identify herself.
“We have nearly 300 clients who have signed actual contracts and made payments and we have not engaged in any frauds,” the company said in a statement. “Gemsea has never thought of obtaining subsidies without producing the vehicles, but in order to meet the strong demand by clients to enjoy the favorable policies for NEVs, we have been careless in our management.”
The government might detail how it plans to cut the subsidies for plug-in hybrid and fully electric cars early next month, Bank of America Merrill Lynch analyst Jeff Chung (叢明) said.
Payments to electric van and bus makers, including Gemsea, surged 600 percent in December from a month earlier and accounted for 41 percent of the entire sector’s subsidies for the year, Chung wrote in a report on Monday last week.
Makers of electric commercial vehicles receive some of the most generous subsidies and sales surged six-fold last year to about 120,000 units, the China Association of Automobile Manufacturers said.
The combined subsidies for bigger, bus-type vehicles can total as much as 1 million yuan, compared with about 100,000 yuan for passenger cars in some cities.
“We expect marginal players and subsidy cheaters to be eliminated by the new scheme,” Chung wrote.
China’s regulators have proposed cutting subsidies for electric buses and imposing a price ceiling on passenger vehicles that qualify for incentives. It is also considering a California-like system in which automakers can earn credits by selling “cleaner” vehicles or buying them from one another to stay in compliance with government objectives.
“Bad money will drive out good,” said John Zeng (曾志凌), an analyst at LMC Automotive in Shanghai. “A few rotten apples are going to spoil it for everyone.”
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