The Ministry of Finance exposed the names of five new-energy vehicle producers that swindled subsidies from the central government on Thursday following an investigation of 90 such manufacturers in the country from early 2016.
The five companies--Suzhou Gemsea, Higer Bus, Wuzhoulong Motors, Mychery Bus and Shaolin Bus - illegally obtained a total 1.01 billion yuan in subsidies in 2015 and claimed to have sold 3,547 vehicles that were actually either unfinished or unsold.
The ministry said the five companies are to return the illegally gained subsidies, fined and will be disqualified for subsidies from 2016. Gemsea, which had the severest violations, will be removed from the country's list of automakers.
In 2009 the central government started offering subsidies to stimulate the new-energy vehicle sector and 33.4 billion yuan had been earmarked by the end of 2015, the ministry said.
Late last month, Song Qiuling, an official with the ministry, said that it is considering raising the threshold at which carmakers qualify to receive subsidies from the central government.
"The 'one-size-fits-all' subsidy scheme was effective in the early stages, and it is what is done internationally, but it may result in carmakers being over-reliant on financial stimuli, making them reluctant to do research and development, which would lead to poorer-quality products," Song said.
Chen Qingtai, director of China EV 100, said that Chinese carmakers and the Chinese government must address the critical question of how the industry stays competitive.
This is especially important, he stressed, as international rivals are introducing an increasing number of products into the market, while the government is curtailing stimulus measures for the new-energy vehicle sector.
From this year, China is gradually cutting subsidies to the new energy auto sector, and will cease all subsidies at the end of 2020.
"A key to meet the challenge (facing the domestic industry) is to make further breakthroughs in core technologies and substantially improve our competitive edge," Chen said.
Last year, around 350,000 new energy vehicles were sold. Through the first seven months of this year, 207,000 new energy vehicles were sold, up 122.8 percent year-on-year.
