China punishes five EV makers for subsidy fraud

Bloomberg

Sat, Sep 10, 2016 - Page 10

China punished five manufacturers of electric vehicles (EV) for scamming the government of about US$150 million in subsidies in a crackdown aimed at rooting out fraud in the fast-growing industry.

The five companies were highlighted by the government as being “classic cases” unearthed in its probe into the sector, which involved investigations into 90 major new-energy vehicle makers covering 401,000 vehicles.

The probe found instances where subsidies were claimed for unsold vehicles and others where automobiles were left idle after companies received payouts.

Gemsea Coach Manufacturing Co (吉姆西客車製造), a Suzhou-based bus maker, had its production license revoked and ordered to pay back all of its subsidies received last year. The company faked documents to illegally receive 261.6 million yuan (US$39 million) in financial assistance for 1,131 vehicles, the Ministry of Finance on Thursday said in a statement detailing the results of its eight-month investigation into the industry.

Another four companies — Chery Wanda Bus Co (奇瑞萬達客車), Shenzhen Wuzhoulong Motors Group (深圳五洲龍汽車), Higer Bus Co ( 金龍聯合汽車) and Shaolin Bus Co (少林客車) — were fined 50 percent of the amount of subsidies they received in addition to the clawback of financial aid, according to the statement.

The ministry did not say whether more companies were involved in subsidy fraud.

The ministry will work with relevant agencies to “accelerate the refinement of support policies, raise the qualification bar to encourage advances in technology, and phase out subsidies at the appropriate time to help the new-energy vehicle industry quickly enter a stage of healthy self-development,” it said in the statement.

After a sluggish start, generous state support and the promise of coveted new licenses to manufacture EVs have combined to cultivate a gold-rush mentality, prompting concerns the industry is plagued by too many substandard companies that lack the technology to face global competition.

From 2009 to last year, the central government disbursed a total of 33.4 billion yuan in subsidies to support the purchases of these automobiles. China surpassed the US as the largest market in the world for electric vehicle sales last year.