Chinese EV maker Chery debunks improper subsidy claims

Chinese electric vehicle maker Chery has denied improper subsidy claims. According to reports, the automaker denied all allegations that it improperly claimed government subsidies for environmentally friendly vehicles.

The denial comes after an audit carried out by the Ministry of Industry and Information Technology disqualified declarations by Chery and BYD for a combined $53 million in subsidies covering thousands of vehicles sold between 2015 and 2020. In its statement, Chery mentioned that it consulted with authorities regarding some missing receipts due to the age of the sales record.

Chinese EV maker Chery debunks improper subsidy claims

Chery also emphasized that it had reported the situation truthfully, adding that it had not carried out any wrongdoing. “Our company has truthfully reported to the authorities that we did not collect certificates for end sales; there’s no fraudulent act,“ Chery said in a statement.

The audit, which was carried out earlier this year, saw about 21,725 vehicles disqualified due to discrepancies such as missing documents or failure to meet mileage thresholds. Chery was responsible for about 7,663 disqualified vehicles, with most of its vehicles disqualified due to missing certificates rather than mileage issues. BYD, on the other hand, saw 4,973 of its vehicles disqualified.

The government has not accused any of the companies of fraud, and the audit document did not specify any penalties or reimbursements as a result of the disqualification. However, according to past policies, vehicle makers have had to repay subsidies for vehicles that failed to reach the accepted mileage standards. Chery clarified that the audit only covered unpaid subsidy claims, meaning that no repayments were necessary. BYD, another Chinese EV maker involved in the audit, is yet to respond to the allegations.

The allegations are coming off an audit carried out by the industry ministry. According to the audit, the ministry discovered that Chery and BYD improperly claimed a combined $53 million in government subsidies for eco-friendly vehicles sold since 2020, accounting for 60% of improper claims. The audit, carried out by the Ministry of Industry and Information Technology last month, discovered that about 21,725 vehicles should not have received subsidies that amounted to $121 million.

Repaying subsidies has the potential to reduce pain for China’s automakers as the industry continues to contend with excess capacity and the fallout from a prolonged and fierce price war that has affected profitability and set dealers and suppliers at odds with manufacturers. Top leaders in the country have promised to look into the issue, with a promise to increase regulations on pricing and support the orderly phasing out of outdated production capacity.

China provided generous subsidies for new energy vehicles between 2009 and 2022 to push the adoption of electric vehicles. The move works, and sales of electric vehicles started to surpass gasoline-powered car sales every month since March. The ministry report includes audits by local governments, which are now carrying out more audits for 2021 and 2022.

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