China Penalizing ‘New Energy’ Bus Makers for Taking Illegal Subsidies

Five Chinese bus makers are being penalized by the government for taking about 1 billion yuan ($150 million) in illegal “new energy vehicles” subsidies for all-electric and plug-in hybrid vehicles.

China’s Ministry of Finance is revoking the production license of Suzhou Gemsea Coach Manufacturing. The ministry said that the other four firms, including a subsidiary of popular Chinese carmaker Chery Holding, will be fined about half the amount received in new energy vehicles subsidies. Efforts will also be made to obtain recovery of any awards which have been obtained illegally by these companies.

Chery Wanda Guizhou Bus, King Long United Auto Industry, Shenzhen Wuzhoulong Motors, and Henan Shaolin Bus claimed subsidies for vehicles they had not finished building, according to the ministry.

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It’s a blow to China’s new energy vehicles campaign to bring 700,000 new plug-in electrified vehicles to its roads this year. China’s NEV goals include light-duty passenger vehicles with electrified buses and trucks. Only 215,000 of these new vehicles were sold in the first seven months of 2016, according to China’s automakers association.

Suzhou Gemsea had committed a comprehensive scam to pump up production and sales figures, the ministry said. It went down to the fine details including forging sales and manufacturing certificates and licenses for the vehicles.

“Individual companies seeking profit, violated relevant laws to cheat and fraudulently obtain financial subsidies, seriously disrupting the market order, violating the legitimate interests of firms that honor the law in researching, developing and manufacturing new energy vehicles,” the ministry said in a statement.

The finance ministry will also be penalizing other potential violators of subsidy policies who received funding. Company names were not given. The ministry inspected 90 companies overall participating in the new energy vehicles program.

The government spent $4.5 billion last year in subsidies for PEVs. These subsidies are set to be gradually phased out by 2021.

Reuters