Chinese EV Maker Chery Faces Scrutiny Over $53 Million Subsidy Disqualification

• What Led to the Subsidy Disqualification?
• How Much Money Is at Stake?
• What’s the Broader Impact on China’s EV Industry?
• How Does This Fit into China’s EV Subsidy History?
• What’s Next for Chery and BYD?
• FAQs

China's Ministry of Industry and Information Technology (MIIT) has disqualified subsidies worth $53 million for thousands of electric vehicles (EVs) sold by Chery and BYD between 2015 and 2020. The audit revealed discrepancies in documentation and mileage thresholds, with Chery accounting for 7,663 disqualified vehicles and BYD for 4,973. While no fraud allegations were made, the findings highlight ongoing challenges in China's EV subsidy program. Here’s a DEEP dive into the implications and industry context.

What Led to the Subsidy Disqualification?

An MIIT audit found that Chery and BYD improperly claimed subsidies for 21,725 EVs sold between 2015 and 2020. The issues ranged from missing documentation to vehicles failing to meet mileage requirements. Chery emphasized it had reported the discrepancies truthfully and denied any misconduct, stating, "We disclosed to authorities that we lacked end-sale certificates, but there was no fraudulent intent." BYD has yet to publicly respond to the findings.

How Much Money Is at Stake?

The disqualified subsidies total $53 million, part of a broader $121 million in improper claims identified by MIIT. Notably, Chery’s 7,663 disqualified vehicles were primarily due to missing certificates, while BYD’s 4,973 vehicles faced mileage-related issues. The government has not demanded repayments, as the subsidies were unpaid—a silver lining for the automakers amid China’s brutal EV price war.

What’s the Broader Impact on China’s EV Industry?

China’s EV sector, already grappling with overcapacity and profit erosion from price cuts, faces added pressure as regulators tighten subsidy oversight. The audit underscores the delicate balance between promoting green energy and preventing misuse of public funds. Industry analysts, including the BTCC research team, note that while the disqualifications are a setback, they reflect growing accountability in the sector.

How Does This Fit into China’s EV Subsidy History?

From 2009 to 2022, China offered generous subsidies to accelerate EV adoption, fueling the rise of domestic giants like BYD and Chery. However, as the market matures, policymakers are phasing out direct incentives in favor of stricter compliance checks. The MIIT audit signals this shift, with local governments now reviewing 2021–2022 subsidies for further discrepancies.

What’s Next for Chery and BYD?

Chery maintains its stance of transparency, while BYD’s silence leaves room for speculation. Neither company faces penalties, but the reputational risk is real. As one industry insider quipped, "In China’s EV race, the only thing faster than sales growth is regulatory scrutiny."

FAQs

Why were Chery and BYD’s subsidies disqualified?

The audit found missing documentation and unmet mileage standards for 21,725 vehicles sold between 2015 and 2020.

How much did the disqualifications cost the automakers?

Chery and BYD lost claims for $53 million in subsidies, part of $121 million flagged by MIIT.

Will Chery and BYD have to repay the subsidies?

No. The subsidies were unpaid, so repayments aren’t required—a relief amid China’s ongoing EV price war.