China Plans To Slash Electric Cars Subsidies After Major Fraud

(REUTERS/Tyrone Siu)

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Andrew Follett Energy and Science Reporter
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Massive fraud has caused China to investigate electric car sales and sharply cut subsidies, according to an article published Thursday in Bloomberg.

The Chinese government believes it could have doled out subsidies to entirely fake companies in its zeal to have five million fully electric or hybrid cars hit the roads by 2020. China now plans to phase out the subsidies after 2020 to cut back on fraud.

The government’s crackdown began after a company called Suzhou Gemsea Coach Manufacturing Co., told the Chinese government it produced 3,700 electric vehicles last year and created almost every car the month before the government reduced subsidies.

State TV reporters and inspectors examined the company and found it was actually operating out of a shed and clearly had not produced that number of vehicles, according to state-run China Central Television.

“They have reported fraudulent production and sales numbers, and even obtained number plates before production,” Dong Yang, leader of the investigation by four government ministries, said during the TV broadcast. “Gemsea did this because they want subsidies.”

China has spent $2.3 billion subsidizing electric and hybrid vehicle makers since 2009, according to the same report.

China has spent enormous amounts of money attempting to go green, much of which was either wasted or misused, according to the government. The country spent more than $80 billion building new green energy in 2014 alone, while the U.S. spent a “mere” $34 billion.

The Chinese government stopped approving new wind power projects in the country’s windiest regions last month because much of the power was being wasted, according to the China’s National Energy Administration. Government statistics show 33.9 billion kilowatt-hours of wind power, or about 15 percent of all Chinese wind power, was wasted in 2015 alone.

Despite the freeze on new wind farms, the Chinese government still plans to get 15 percent of the country’s electricity from green energy by 2020.

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