EV Subsidy Fraud Rampant In China: 20 More OEMs Implicated, Including Nissan & Hyundai

11 months ago by Eric Loveday 15

Carbridge Toro (BYD)

Carbridge Toro (BYD)

The Nissan LEAF In China

The Nissan LEAF In China

The electric car subsidy scandal continues to grow in China where an additional 20 automakers have been accused of defrauding the program, according to local reports:

“China has accused more than 20 additional car makers, including Nissan and Hyundai, of breaking rules on green car subsidies, according to a state media report, widening a scandal over a $4.5 billion annual payout program.”

The scandal started with┬áChina’s Ministry of Finance calling out five automakers for defrauding the program. The department issued severe fines and in one instance even revoked the license for one company to make automobiles in China. This initial round was limited to bus makers, but now the scandal include several more prominent automakers like BYD, Nissan and Hyundai.

As Reuters reports:

“The scandal has cast a pall over China’s drive to use subsidies to combat heavy pollution which affects large swathes of the country. This drive helped sales of electric and plug-in hybrids more than quadruple last year to 331,000 vehicles.”

“China’s official Securities Daily newspaper reported on Friday that there was a list of an additional 20 companies who were also found to have committed violations.”

The majority of the accused automakers are being called out for over-reporting electric car sales in order to get undeserved subsidies from the government.

Reuters reached out to most of the accused automakers and the comments received were basically the same across the board. Here’s Hyundai’s comment:

“As we understand the government investigation is proceeding, we cannot comment on this issue at this stage.”

Source: Reuters

Tags: , , , , , , ,

15 responses to "EV Subsidy Fraud Rampant In China: 20 More OEMs Implicated, Including Nissan & Hyundai"

  1. Pushmi-Pullyu says:

    The real question for me, on this issue, is: What is the story behind the story?

    Without in any way intending to defend the level of corruption among Chinese government officials, I note that Western companies trying to do business in China have come to accept that, to a greater or lesser extent, what we Westerners call “corruption” is simply the way the Chinese have been doing business for centuries. It’s ingrained in the culture. The same pattern, what we would describe as petty bribery and influence-pedaling, goes back to the days of Imperial China. The Communist takeover of the 1930s didn’t really eradicate the former culture in which corrupt bureaucrats and petty officials were the real authority in the county; that governmental structure still exists in China’s “Prefecture” organizational structure, which is in some ways similar to county governments here in the USA.

    So, what’s the story behind the story? Is the Chinese central government’s goal here really to drive corruption out of this segment of government incentives? Or is the official spotlight on corruption in this field, while ignoring widespread similar corruption elsewhere, an indication that the central government has decided to roll back the incentives, and they’re focusing attention on the corruption there as a method of generating public outrage which will create public support for reducing or ending the subsidies?

    Or has the level of corruption, the theft of “public” funds, in this particular industry risen to a significantly higher level than is the average in China’s other industries?

    As a “round-eyed” Westerner trying to peek through the “bamboo curtain”, all I can do is speculate.

    At any rate, it’s hard for me to believe that the Chinese government is going to impose on BYD the same penalty they’ve imposed on previously denounced EV makers who are also accused of fraud in taking subsidies they didn’t actually earn: That those companies will forever lose the ability to benefit from such subsidies.

    However, I note this article indicates that only one of the five previously accused violators will actually have their subsidies permanently revoked. That would open the door to the central government allowing BYD to continue benefiting from those subsidies.

    BYD is by far the largest auto maker in China. It’s hard for me to believe the same government which actively supports so many Chinese industries with substantial financial support, tax breaks, etc. would turn around and sabotage the advantage in international trade of BYD, their largest and most successful auto (and EV bus) maker. Not unless BYD has done something to get the central Chinese government really and truly torqued off at them. I’m not aware that BYD has done anything to provoke that level of outrage among the Chinese oligarchy.

    1. ModernMarvelFan says:

      “BYD is by far the largest auto maker in China. I”

      It is by far the largest EV maker.

      Not large traditional ICE maker in China.

      1. Pushmi-Pullyu says:

        You’re right; Wikipedia lists it only as one among several large Chinese auto makers.

        Thank you for the correction.

        https://en.wikipedia.org/wiki/Automotive_industry_in_China

  2. fbj says:

    Hardly surprising.

    1. ffbj says:

      Hey, are trying to impersonate me? If so, nice work.

  3. przemo_li says:

    Will it result in EV sales updates for previous years?

    On a separate note.
    China is the only country where bribery can get You killed, and there are many examples where local governors lost them.
    Though since China is totalitarianism state one can not be really sure weather real cause was corruption or political dissent.

    1. Alonso Perez says:

      Bribery can get you killed in lots of countries. In China it can also get you the death penalty, but that’s not the only way bribery can get you killed.

  4. Kdawg says:

    “These include Japan’s Nissan, South Korea’s Hyundai, Geely, Anhui Jianghuai Automobile (JAC Motor) and a subsidiary of BYD.”
    ———-

    Do we have a full list of all 20?

  5. Josh says:

    Does this put the huge BYD sales numbers into question?

    1. Jay Cole says:

      Not likely, for the big names, early reports seem to indicate smaller transgressions on how/where they received rebates for sales logged…not that they made up sales (and unlike Suzhou Gemsea Coach Manufacturing who apparently didn’t even build any EVs, lol).

      Chinese rebates can vary based on the region/city the EVs where sold in, so at first blush it appears that some sales may have been discovered to have been routed through regions with higher available discounts.

      Just of interest, BYD specifically is mentioned as being on the list via state media, but unlike Hyundai BYD says they have yet to be contacted about any infraction.

      1. Josh says:

        Ah, ok. Thanks for those details.

  6. Bloggin says:

    With the bus makers, the penalty was not being able to participate in the EV subsidy…..FOREVER!

    If that holds true for auto manufacturers, and it sounds like it will, since they banned one company from selling cars altogether, this is good news for the other automakers to capitalize on the huge and growing EV market in China.

    Some of the biggest EV competition just may have just given their competition a huge sales advantage.

    1. Pushmi-Pullyu says:

      It makes sense for China’s central government to “make an example” out of at least one of the offending companies, especially if it’s one of the large number of very small auto makers in China which pop up quickly, and disappear even more quickly.

      It makes far less sense for China to shoot itself in the foot by banning BYD from making automobiles (including EVs), at the same time the central government is making a huge push to increase production of PEVs (Plug-in EVs) with a mandate for at least 30% of all government fleet vehicles to be “NEVs”; “New Energy Vehicles”, which mostly means PEVs.

      Of course I could be wrong, but my prediction is that BYD will have to pay a fine, and may in the future be more closely scrutinized, but won’t have to suspend manufacturing, nor will it have to permanently give up its subsidies for selling PEVs.

  7. fesodes says:

    It was Tianjin BYD, a joint venture between BYD and the Tianjin local government, that was accused in the 2nd round. The Tianjin government basically forced BYD to source batteries locally. Hence batteries used were produced by Tianjin Lishen and not BYD.

    1. kangol says:

      Nice. Some actual information on the internet. And not surprising, given the kind of power plays that many local governments try to pull, with Tianjin being particularly representative.