September 12, 2016

China’s war with its own EV manufacturers has got personal and now the state has sanctioned five companies for cheating the public purse of $150 million. Now it has accused 20 more, including Nissan, Hyundai and Geely.

The country has been in the news recently saying it might effectively cull up to 90% of its EV start-ups with tougher legislation and licensing.

At least one company loses their licence

Now it has emerged that it will revoke Suzhou Gemsea Coach Manufacturing’s license altogether and fine four more companies over financial irregularities. One of the companies involved is a subsidiary of Chery Holding, which owns the seventh biggest car manufacturer in China.

The authorities reckon that the five companies received 1 billion Yen ($150 million) in illegal subsidies.

“This is a major blow to the industry and also has a large impact on the country’s policy enforcement,” said Xu Yanhua, vice secretary for the China Association of Automobile Manufacturers.

But it’s about to get a lot worse. The government has officially accused 20 more companies and there are some big names under the microscope. JAC Motor and a subsidiary of BYD, China’s biggest domestic car manufacturer, stand accused alongside Nissan, Geely, Hyundai and 15 more.

The country has a golden goose, but it needs to clean up

China usurped America as the world’s biggest EV, plug-in hybrid and fuel cell market this year with 331,092 sales last year. That has led to a gold-rush with more than 200 EV start-ups. The government has actively encouraged this mass switch to zero emissions cars, targeting 3 million EV sales a year by 2025. It recently floated the idea of legally-enforceable quotas for the major manufacturers.

The idea is that large manufacturers have to produce a certain percentage of zero emissions cars or pay fines. The government has also paid out more than $2.3 billion in subsidies since 2009, but it now looks like a lot of that money went to the wrong places.

Time to fix the issues and go forward

Not only that, China seems to get behind its electric car industry one week before tearing it down the next and it’s sending mixed signals to the manufacturers and to the wider world. So China really needs to get a grip on its EV policy, because it’s all over the place right now.

China needs Electric Vehicles, its population has the collective spending power to drive the whole industry forward and the country has a hand in some of the most exciting cars out there. But the Chinese government and the auto manufacturers need to get their house in order, fast.

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