China has alleged over 20 extra automakers, such as Nissan and Hyundai, of breaking rules on green vehicle subsidies, as per a state media report, expanding a scandal over a $4.5 billion yearly payout program.
On Thursday, China’s Ministry of Finance penalized at least 5 automakers, alleging them of cheating its program to support electrical and plug-in hybrid automobiles, getting approximately 1 billion yuan ($150 million) in unlawful subsidies.
“This is a major blow to the market as well as has a big influence on the nation’s policy enforcement,” Xu Yanhua, a vice secretary for the China Association of Automobile Manufacturers informed a news briefing.
The ministry said it would revoke the production license of Suzhou Gemsea Coach Manufacturing, while the other four companies would be fined. The companies named also included a subsidiary of Chery Holding.
The subsidy cheating investigation is a surprise to China attaining a full-year sales target of 700,000 electrical and plug-in hybrid cars, added Yale Zhang, managing director of consultancy Automotive Foresight.
About 245,000 such cars have been sold during the first eight months of the year, according to China’s automakers association.
China invested $4.5 billion in 2015 in subsidies for such cars, although it is set to slowly phase out the payments by 2021.