(Yicai Global) June 6 -- China plans to stop handing out licenses for new energy vehicle (NEV) production as the National Development and Reform Commission evaluates existing policies, Sina.com reported yesterday. Though the report provided no further details, the suspension may relate to state subsidy fraud.
The Chinese government has issued 15 NEV production licenses since March last year. The mid- and long-term development plan for the automotive industry issued by the Ministry of Industry and Information Technology (MIIT) and other ministries in April called for cultivating several global top 10 NEV makers by 2020, pointing to great long-term prospect for the industry. About 500,000 NEVs sold in China last year, more than half the world's total.
Despite broad prospects, fraudulent claims for state subsidies cropped up. Last September, the Ministry of Finance published a list of five multi-passenger vehicle makers (Higer Bus in Suzhou, Wuzhoulong Motors in Shenzhen, Chery Wanda Bus Manufacturing Co. in Guizhou, Henan Shaolin Bus and Gemsea Bus Manufacturing Co. in Suzhou) that defrauded the government of NEV subsidies by obtaining vehicle registration certificates for unfinished vehicles.
In total, the companies fraudulently claimed CNY1 billion (USD150 million). Four of the bus-making companies abused the subsidy program by inflating their reported electric-vehicle sales. In the most outrageous example of fraud, the fifth, Gemsea Bus Manufacturing Co. in Suzhou, fabricated its electric-vehicle-manufacturing business entirely and didn't actually make the alternative-energy vehicles, the Ministry of Finance said in a statement on its website last year.
MOF has since suspended subsidy payments to these companies. MIIT, MOF and other two ministries proposed plans to adjust NEV subsidy policies to deal with such fraudulent claims.