10/17/2021

China’s green car subsidy scandal spreads, 20 more car makers named

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.

On Thursday, China’s Ministry of Finance punished at least five car makers, accusing them of cheating its program to subsidize electric and plug-in hybrid vehicles, receiving roughly 1 billion yuan ($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,” Xu Yanhua, a vice secretary for the China Association of Automobile Manufacturers told a news briefing.

The ministry said it would revoke the production license of Suzhou Gemsea Coach Manufacturing, while the other four firms would be fined. The companies named included a subsidiary of Chery Holding [CHERY.UL], owner of the seventh most popular Chinese passenger car brand.

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.

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

“As we understand the government investigation is proceeding, we cannot comment on this issue at this stage,” a Hyundai spokeswoman said in a written statement.

Nissan did not respond to requests for comment. Geely declined to comment

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