China’s Ministry of Industry and Information Technology has identified Chery Automobile Co Ltd and BYD Co Ltd as having improperly claimed government subsidies for eco-friendly vehicles sold between 2016 and 2020.

The audit found that the two companies together claimed $53 million in subsidies that should not have been granted.

This accounted for nearly 60% of the total improper claims uncovered in the audit.

$53 Million in Improper Claims Linked to BYD and Chery

According to ministry documents released last month, 21,725 vehicles were ineligible for subsidies, totaling 864.9 million yuan ($121 million).

Of these, Chery had 7,663 vehicles disqualified, while BYD had 4,973.

The audit did not outline specific penalties or confirm whether repayments would be enforced.

However, the government has previously stated that subsidies must be repaid for vehicles that do not meet mileage requirements.

Chery, BYD, and the ministry did not respond to requests for comment.

Industry Faces Pressure Amid Subsidy Repayments

Repayment of subsidies could intensify challenges for China’s automakers, as the sector is already dealing with excess capacity and the impact of a prolonged and fierce price war.

These pressures have affected profitability and created friction between manufacturers and suppliers.

Further Audits Underway for Recent Years

Between 2009 and 2022, China provided generous subsidies for new energy vehicles to promote electric, plug-in hybrid, and fuel cell adoption.

As a result, monthly sales of such vehicles have surpassed gasoline-powered cars since March.

The ministry’s report compiled results from local government audits, which are now being conducted for 2021 and 2022.

PHOTO: REUTERS/ANTON VAGANOV

This article was created with AI assistance.