Chery and BYD face $53 million repayment after audit questions Chinese green-car subsidies

Two of China’s biggest electric-vehicle makers may have to return a combined 373 million yuan (about $53 million) in state aid after a government audit said nearly 22,000 cars sold up to 2020 should never have qualified for clean-energy incentives.

A Ministry of Industry and Information Technology (MIIT) review found that 21,725 vehicles received subsidies totalling 864.9 million yuan (about $121 million). Chery Automobile accounted for 7,663 ineligible cars and BYD for 4,973, together making up “nearly 60 %” of the improper claims, according to documents released last month.

While the papers did not set penalties, Beijing’s long-standing rule requires manufacturers to repay funds if models fail to meet mileage or technical standards. Industry analysts say that could deepen the financial strain on carmakers already battling a protracted price war and surplus production capacity.

China showered the sector with incentives between 2009 and 2022 to spur adoption of electric, plug-in hybrid and fuel-cell vehicles. Sales of such models have outstripped petrol-powered cars each month since March, MIIT data show.

The State Council has vowed to tighten pricing supervision and phase out outdated capacity after steep discounts squeezed margins and pitted factories against their dealers and suppliers.

Local authorities are now extending the subsidy audit to 2021 and 2022 claims, raising the possibility of further repayments across the industry. BYD and Chery did not respond to Reuters requests for comment, and the MIIT has yet to say when – or if – any money must be returned.

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