Beijing just accused more than twenty auto manufacturers of cheating a system of subsidies meant to incentivize the production of eco-friendly cars. Reuters reports:
On Thursday, China’s Ministry of Finance punished at least five car makers, accusing them of cheating its program to subsidize electric and plug-in hybrid vehicles, receiving roughly 1 billion yuan ($150 million) in illegal subsidies.
“This is a major blow to the industry and also has a large impact on the country’s policy enforcement,” Xu Yanhua, a vice secretary for the China Association of Automobile Manufacturers told a news briefing.
The ministry said it would revoke the production license of Suzhou Gemsea Coach Manufacturing, while the other four firms would be fined. The companies named included a subsidiary of Chery Holding, owner of the seventh most popular Chinese passenger car brand.
This program funnels $4.5 billion to carmakers interested in producing cleaner-emitting and higher-mileage vehicles every year, but China is alleging that some bad actors (including Nissan and Hyundai) are reaping the benefits without producing the results. And on the results side, things do look meager, as through August just 245,000 plug-in hybrids were sold in China, a far cry from the sales target of 700,000 that Beijing set for 2016.
China has an obvious desire to “clean up” its nation’s cars, what with the toxic, deadly, and expensive air pollution that continues to cloud its many megacities. But Beijing is experiencing something that we’ve seen time and again with similar green incentive programs: corruption.
Between lavish government subsidies and a burgeoning market of “eco-aware” consumers, there is a lot of money to be made these days by marketing one’s products as green. But this new niche is a bit like the Wild West, with the producers making up the rules as they go along (just what does organic mean, anyway?). And when they’re not bending the truth with fuzzy marketing, firms are looking to take advantage of lax oversight, hoping to slap the label “clean” on their product without actually doing any of the work to back that claim up. The Volkswagen scandal was the most egregious example of this, but we’re seeing a similar event occurring in China right now.
The bottom line is this: companies care more about their bottom line than they do about saving the planet, regardless of whatever their commercials or billboards might say. A large number of China’s carmakers just got caught with their hand in the cookie jar, but they’re not the first to try and cheat the green system, and they won’t be the last.