China’s Ministry of Industry and Information Technology has found that several automakers, including Chery Automobile and BYD, improperly claimed a total of 864.9 million yuan (about $121 million) in government subsidies for new energy vehicles between 2016 and 2020.
The “Notice on the Initial Review of the Liquidation and Audit of Subsidy Funds for the Promotion and Application of New Energy Vehicles from 2016 to 2020,” released by the China’s Ministry of Industry and Information Technology at the end of last month, showed that 21,725 vehicles were ineligible for subsidies during that period.
Chery applied for subsidies for 8,760 electric and hybrid vehicles, totalling around 240 million yuan, which were later found ineligible. BYD had 4,900 vehicles involving 143 million yuan in cancelled subsidies.
The disqualified vehicles from both companies accounted for nearly 60% of all improper subsidy claims.
In total, automakers applied for subsidies covering 75,814 vehicles worth about 2.93 billion yuan. After review, only 54,089 vehicles met the conditions, and 2.07 billion yuan in subsidies were approved for liquidation.
The government has not yet confirmed if automakers will be required to repay the funds. However, authorities have stated in the past that if vehicles fail to meet mileage standards, companies must return the corresponding subsidies.
The findings come as China’s auto industry faces pressure from overcapacity and continued price competition, which have weakened profits and increased tension between automakers and dealers.
The country has supported the development of new energy vehicles through large-scale subsidies from 2009 to 2022. These incentives covered electric vehicles, plug-in hybrids, and hydrogen fuel cell vehicles.
The policy helped increase adoption, and since March this year, monthly sales of new energy vehicles have exceeded those of gasoline-powered cars.
Local government audits are continuing for the years 2021 and 2022. China’s top leadership has pledged to strengthen regulation and gradually phase out outdated production capacity to stabilize the market.
