China Probes Fraud in EV Industry

China’s central government is investigating suspicions that some makers of electric and plug-in hybrid cars have been overstating sales, recycling “sold” cars and exaggerating driving range claims to garner more government subsidies that can run as high as 55,000 yuan ($8,300) per vehicle, the Shanghai Daily reports.

The probe is being coordinated by the National Development and Reform Commission and three ministries: Finance, Science and Technology, and Industry and Information Technologies.

Reports say tens of thousands of “sold” EVs collected government payments but were never registered. In other cases, cars were sold to fleets managed by the manufacturer, then dismantled so their parts could be reused in new vehicles. Some legitimate customers complain of shoddy quality and unrealistic mileage claims.

The investigation is looking at records of subsidies going back to 2013, comparing vehicle performance to claims and verifying the working status of EVs and plug-ins sold to fleets. Officials promise stern punishment for wrongdoers.

Finance Minister Lou Jiwei told a recent EV conference the government’s subsidy program fostered cheating and low quality rather than supporting innovation and improved core technologies. Last week China’s central government announced it will phase out the incentives but increase spending on product research and development.