BYD, Chery among carmakers found to have claimed extra subsidies

China’s industry regulator found that carmakers, including BYD and Chery Automobile, claimed electric vehicle (EV) subsidies they did not qualify for during the five years that started in 2016. The amounts came to more than 864 million yuan (S$154 million).

Chery, the nation’s largest car exporter, was found to have applied for about 240 million yuan of funding for around 8,760 EVs and hybrids that did not qualify, while 143 million yuan for roughly 4,900 cars BYD sold were removed from the ledger, according to preliminary results published by the Ministry of Industry and Information Technology late in June.

The audit of the EV subsidy programme between 2016 and 2020 was carried out across China earlier in 2025.

In Henan province, for example, a sample of 292 vehicles involving funding of 475 million yuan was assessed, according to a document published by the local government.

It was not immediately clear if the companies are required to return the subsidies, or if the authorities have already deducted the excess amounts from payments to the manufacturers. Representatives for BYD and Chery did not respond to requests for comment.

Beijing is intensifying scrutiny of the auto industry, whose more than two-year-long price war has started to impact the bottom lines of companies across the supply chain and raise concerns that the quality and reputation of Chinese-made cars could be damaged.

Some of the reasons for disqualifying the EVs in the audit included the manufacturer being unable to provide operational data for the cars, or their mileage not meeting requirements, according to documents released by the ministry. 

Automakers, under pressure to meet sales targets, sometimes offload new vehicles to traders or dealers in bulk, who then help register the vehicles, so the companies can book them as sales. Then, the essentially brand-new cars end up on the second-hand market, becoming “zero-mileage used cars”.

China’s Ministry of Commerce has also convened a meeting to address this issue, and consumption subsidies in some parts of China have been paused to investigate whether dealers have used these cars to fraudulently claim rebates. 

China carried out a decade-long national subsidy programme to promote EVs and hybrids starting in the early 2010s, offering up to 60,000 yuan per car. The rebate was paid in bulk to manufacturers, which would then discount the retail price for customers.

The system provided opportunities for scams – in 2016, a People’s Daily report cited estimates that dozens of companies had fraudulently claimed about 9.3 billion yuan in subsidies. 

The authorities have conducted audits in the past on the national EV subsidy programme but usually on a far smaller scale.

An audit completed in 2022 involved only a handful of carmakers and hundreds of cars. The 2025 audit assessed dozens of automakers and more than 75,000 vehicles. BLOOMBERG