The Ministry of Industry and Information Technology (MIIT) has cut subsidy qualifications for seven Chinese automakers over subsidy cheating.
Chongqing Lifan Automobile Co., Ltd, one of the punished producers, was accused of equipping 1,353 new-energy cars with sub par number of battery cells in 2015, when it applied for financial subsidies.
The MIIT penalty effectively bans the automakers from entering an official catalogue of recommended vehicle types which get fiscal support to lower their prices and boost market competitiveness.
Authorities will review their application after they rectify their problems in two months.
Authorities launched investigations into subsidy cheating cases in beginning of 2016 after the country had forked out about 33 billion yuan (about 4.8 billion U.S. dollars) of subsidies between 2009 and 2015.
The subsidy program has played an important role in the country's booming market for new-energy vehicles, which are seen as effective in cutting emissions.
China sold 507,000 new-energy vehicles last year, a rise of 53 percent year on year.
The government will cut subsidies to new-energy vehicles by 10 percent this year from the 2016 level and plans to phase out the subsidies by 2020.
