Big Subsidy Scandal Has China Cutting Off Cash For Green Cars

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Andrew Follett Energy and Science Reporter
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China will slash green car subsidies 20 percent this year following several scandals, state-controlled media reports.

The announcement, reported by the Global Times, follows the government formally accusing more than 20 car companies of illegally taking subsidies. China doesn’t give any formal reason for the subsidy cuts.

China may have doled out subsidies to fake companies as part of its plan to have five million electric or hybrid cars on the road by 2020. China issued stiff fines to five major car companies, including Nissan and Hyundai, which allegedly stole $150 million each year in subsidies.

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 ended up entirely revoking the production licenses of Suzhou Gemsea.

The Chinese government spends $4.5 billion on green car subsidies each year to help increase the sales of electric and plug-in hybrid cars. The subsidies caused green car production to more than quadruple last year to 331,000 vehicles and were intended to help sell over 700,000 vehicles annually.

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.

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