Crackdown on electric-vehicle subsidy cheats expected to favour industry leaders
As many as 250,000 EVs were sold in China last year – but the driving force behind that success was the massive 33.4b yuan in direct cash subsidies offered
China’s crackdown on electric-vehicle (EV) subsidy fraud since the start of this year may deter demand short term — but longer term it bodes well for the industry’s growth by knocking out low-quality manufacturers and giving industry leaders the technology edge, analysts say.
The government revealed last week it had punished five auto makers for defrauding a total of 1 billion yuan in subsidies. One of them didn’t even make EVs.
All the offenders were fined and had to return the subsidies, while one had its auto production licenses revoked.
As part of the clampdown, officials are now imposing more stringent technology standards and limiting the number of startups in the EV sector.
However, more action could follow. The Ministry of Finance (MOF) said more than 90 major new energy vehicle (NEV) firms have been investigated within the sweep for possible fraud, and those five companies punished so far are simply the worst cases. The term “new energy” includes pure EVs and plug-in hybrid EVs.
The result, said Deutsche Bank analysts Fei Sun and Vincent Ha in a recent research note, is the crackdown “has deterred NEV demand, in particular for electric buses, and created uncertainty over the subsidy scheme”.