China Association Slashes Forecast of Plug-in Sales in Wake of Subsidy Scandal

China’s top auto industry association slashed its forecast of plug-in electrified vehicles that will be ordered this year as the government subsidy scandal widens.

The China Association of Automobile Manufacturers changed its forecast for “new energy vehicle” orders to 400,000 from 700,000 vehicles, down 43 percent. Xu Haidong, assistant general secretary with the government-backed group, made this announcement at a media briefing in Beijing on Friday.

The association’s revised forecast followed the Chinese government’s announcement that five Chinese bus makers were penalized by the government for taking illegal subsidies for new energy vehicles. One of them, Suzhou Gemsea Coach Manufacturing, had its production license revoked by the Ministry of Finance.

An additional 20 automakers were later ruled to have violated rules in the subsidy program. These included global automakers Nissan and Hyundai, and Chinese makers Geely, JAC Motor, and a subsidiary of electric carmaker BYD.

SEE ALSO: China Penalizing 20 More Automakers for PEV Subsidy Rule Violations

Industry data in China reported that 330,000 new energy vehicles (all-electric and plug-in hybrid vehicles) were purchased in China last year, more than quadruple the number from the year before. The government had invested 30 billion yuan (about $4.5 billion) is subsidies last year.

Hitting that 400,000 target would still place China in the top spot for PEV sales by country. The U.S. would follow in second, with its PEV sales passing 93,000 units sold through the end of August, according to HybridCar’s Dashboard. In 2015, 114,248 PEVs were sold in the U.S., as reported by Dashboard.

China’s sales numbers include light-duty passenger vehicles with electrified buses and trucks, while the U.S. figures only include light-duty passenger vehicles. BYD’s Qin (as seen in the photo above) has been the top selling PEV in China.

The Chinese government fraud scandal first started breaking about two months ago in local media, according to South China Morning Post. That sparked an official investigation and may cause an overhaul of the current program, which is scheduled to phase out in 2020.

“Quite a few carmakers were troubled by a cash shortfall because the subsidy payouts were postponed owing to a probe into the fraud, hence the companies were turning more cautious in their decision making,” said Xu Yanhua, deputy secretary of the automaker’s association.

South China Morning Post