Chery Denies Allegations of Improper Subsidy Claims: A Deep Dive into the $53M Green Vehicle Audit

• What Did the Audit Reveal About Chery and BYD?
• How Did Chery Respond to the Allegations?
• Why Does This Matter for China’s EV Industry?
• What’s Next for Subsidy Policies?
• FAQs: Your Questions Answered

Chinese automaker Chery has firmly denied accusations of improperly claiming government subsidies for eco-friendly vehicles, following an audit that disqualified $53 million in claims. The audit, conducted by the Ministry of Industry and Information Technology, flagged discrepancies in documentation and mileage thresholds for 21,725 vehicles sold between 2015 and 2020. While no fraud charges were filed, the findings highlight ongoing challenges in China’s EV subsidy program. Here’s what you need to know.

What Did the Audit Reveal About Chery and BYD?

The Ministry of Industry and Information Technology’s audit uncovered that Chery and BYD had claimed $53 million in subsidies for vehicles that allegedly didn’t meet eligibility criteria. A total of 21,725 vehicles were disqualified, with Chery accounting for 7,663 of these, primarily due to missing certificates rather than mileage issues. BYD saw 4,973 vehicles flagged. Interestingly, the government hasn’t accused either company of fraud, and the audit document didn’t specify fines or refunds—though past policies required reimbursements for non-compliant vehicles.

How Did Chery Respond to the Allegations?

Chery issued a statement denying any wrongdoing, emphasizing it had reported the discrepancies “with sincerity” and consulted authorities about missing documentation tied to older sales records. “We did not collect final sales certificates fraudulently,” the company asserted. Analysts note that while the audit raises questions about oversight, Chery’s transparency in addressing the issue may mitigate reputational damage. The BTCC research team points out that such audits are becoming routine as China tightens subsidy controls.

Why Does This Matter for China’s EV Industry?

China’s generous NEV (New Energy Vehicle) subsidies—active from 2009 to 2022—turbocharged EV adoption but also invited scrutiny. With sales now outpacing gasoline cars monthly since March, the government is cracking down on loopholes. This audit, covering unpaid subsidy claims, suggests a focus on future compliance rather than penalizing past actions. However, refunds could strain automakers already grappling with overcapacity and a brutal price war. As one industry insider quipped, “Subsidy audits are like dental checkups—nobody enjoys them, but they’re necessary for long-term health.”

What’s Next for Subsidy Policies?

Local governments are expanding audits for 2021–2022 claims, signaling stricter enforcement. While Chery clarified this audit involved only unpaid claims (requiring no refunds), the precedent worries smaller manufacturers. The ministry’s report also flagged $121 million in total improper subsidies, with Chery and BYD representing 60% of the tally. For context, that’s enough to fund 1,210 public charging stations—a irony not lost on EV advocates.

FAQs: Your Questions Answered

Were Chery and BYD fined for the improper subsidy claims?

No formal fines were issued, but historical policies required refunds for non-compliant vehicles. This audit focused on unpaid claims, so no repayments were triggered.

How many vehicles were disqualified in total?

21,725 vehicles lost subsidy eligibility—7,663 from Chery (mostly due to paperwork gaps) and 4,973 from BYD.

Does this affect current EV subsidies in China?

While the NEV subsidy program ended in 2022, the audit underscores tighter scrutiny for other green incentives still active.