Under pressure because of air quality concerns in its major cities, the Chinese government has heavily subsidized the sales of electric cars since 2010 and forced municipal governments to do the same. These subsidies could slash more than half of the price of the car or even more, as CarNewsChina reports the Zhi Dou D2 EV can be bought for just 49.800 Yuan ($7.560) after subsidies, which total an astonishing 109.000 Yuan ($16.550).
Such a scheme is bound to cause a distortion in the market place, but even worse: cause companies to fraud, and that’s exactly what has happened, according to various Chinese news media. The Economic Observer in Beijing and National Business Daily in Shanghai reported that unspecified domestic automakers have over-reported sales of their plug-in cars in order to wrongfully claim government subsidies. Some of them are claimed to have reported sales of EVs to subsidiary “shell” companies, only to remove the batteries and reuse them in the next production run. [Read more…]