China Probes NEV sector for subsidy fraud

The buyer of a pure electric bus would receive up to 300,000 yuan as a national subsidy.

Zhang said: "The government subsidies on new-energy vehicles are way too generous. But there's no specific punitive measures on those who fail to meet standards on quality or safety."

Chen Qingtai, former vice-director of the China Development Research Center of the State Council, said at a forum two weeks ago: "The present sales volume is driven by government policies, rather than the market. The sales number does not indicate that Chinese pure electric vehicle makers have competent technologies.

"Some players joined the sector for quick money, but the watchdogs should not allow 'bad money to drive out good'. Makers of fake and substandard products deserve severe punishment. The authorities should fine them so they lose every penny and become bankrupt, to maintain a healthy sector."

Shenzhen BYD Daimler New Technology Co pins its hopes on government measures to direct the market toward a more prosperous future. The market would grow faster with support from the central and local governments, as there are many issues for the government to tackle, according to Ronald Koning, vice-president of sales and marketing for BYD Daimler.

A Nielson China report released in August found 57 percent of respondents aware of the government stimuli regulations might consider buying NEVs, 19 percent more than those who would not. When the survey asked about the premium segment, 60 percent of those aware of the stimuli would consider NEVs, 26 percent more than who would not.

However, "immature technologies" topped the reasons people chose not to purchase NEVs, followed by "high prices", according to the report.

Chen said: "In the long run, the winners will be those who own technologies, rather than those simply piecing together a car. The nation's NEV makers still don't have the competence to rival international companies. That's obvious, despite being the world's No 1 for pure electric vehicle volume."