Chinese Corporate Scam + Green Subsidy Scam = Mountains of Abandoned New Cars

Here’s another entry for the “China’s economy is smoke and mirrors all the way down” file. Remember the previous story on the mountains of unused bikes for failed Chinese bike-sharing startups? Well, evidently the exact same thing happened with “green” cars:

The mechanics of the scam:

  1. First they put together a down payment, order a batch of vehicles, and license them at a vehicle administration office.
  2. Then they contact government officials, present the vehicles in their hands and apply for permission on the grounds that they are operating an online car sharing business.
  3. The third step is to get the government’s permission, then go to the bank to get a loan.
  4. The fourth step is to find a financer and present the vehicles and the government papers to secure some venture capital from the financer.
  5. Last mortgage the vehicles to some smaller financial institutions to squeeze out their final value.

After all these steps are completed, the scammers disappear. The bank, the financer and the small financial institution are left with triangular disputes while the vehicles rot somewhere in the wilderness.

More takeaways:

  • China offers subsidies for new “green” cars.
  • Lots of these subsidized cars are bought by ride-sharing startups…
  • …that just happen to be subsidiaries of the the Chinese car companies manufacturing the cars being subsidized. (Presumably these are different companies than the pure scammers, but who the hell knows?)
  • Despite not being used, many have new license plates and up-to-date inspections.
  • Though there are minimum mileage requirements to get the subsidies, the businesses (in best Chinese fashion) just falsify the data.
  • “Especially the electric cars produced in previous years, the battery has a short range and the performance declines quickly. It’s worthless. At present it costs more to replace a new battery than the value of the old car.”
  • Most insane of all: China’s communist government required scrapping vehicles after 10 years or 100,000 kilometers. How’s that for “green”?
  • They later revised this to 15 years with annual inspections, then revised it again to a maximum of 600,000 kilometers.
  • And, of course, you can bribe inspectors to pass the inspection.

    • Green subsidy scams and failed startup detritus is hardly unknown in the U.S. (witness all those electric scooter sharing startups that are just now starting to go bankrupt), but China’s corner-cutting, get-rich-quick mentality combined with green government subsidies, interlocking corporate ownership, the usual Chinese scam artists and loose, bribe-able enforcement at various levels of Chinese government all combined for an especially appalling mountain of waste.

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    This entry was posted on Sunday, June 12th, 2022 at 1:01 PM and is filed under Communism, Foreign Policy, Global Warming, video, Waste and Fraud. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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