In July, Changjiang Automotive, once known as “Asia’s largest” new energy vehicle factory, officially went bankrupt, exposing the story of the development of China’s new energy vehicle industry. Massive subsidies from the Chinese Communist Party have led many to jump into the industry. However, there is too much fraud, which eventually leads to debt and bankruptcy.

Changjiang was once the star of China’s new energy vehicle industry. In 2015 and 2016, it was one of the few companies in China with dual qualifications for fuel and new energy vehicle manufacturing.

However, Changjiang after 12 consecutive years of losses, it owed more than $7.3 billion (50 million yuan) in wages when it officially declared bankrupt. It also had external liabilities as high as $438 million (3 billion yuan).

In fact, the new energy vehicle manufacturing qualification and the initial development of Changjiang are closely related to the solid political background of its founder.

Cao Zhong, the founder of Changjiang, once worked for the State Planning Commission, the top economic management department of the Chinese Party. At that time, many speculated that he would make Changjiang Auto become the standard company for new energy vehicles.

But Cao also admitted that he did not understand cars when he entered the new energy vehicle industry.

According to a former employee, Changjiang applied for government subsidies from the beginning.

Some employees broke the news that Cao did not want to build a car properly but went for government subsidies. He was suspected of cheating on the subsidies.

Chinese authorities have spent vast sums of money on subsidies to promote the development of new energy vehicles. But it’s all almost meaningless.

Wulong Electric Vehicle, the holding company of Changjiang Automobile, once said that because we have received government subsidies for a long time, the operating cash flow was insufficient, which delayed the production of overseas electric vehicle orders.

In 2018, the company’s capital flow began to crumble, and this year was when China’s new energy vehicle subsidies were significantly reduced.

China’s new energy vehicle industry mainly relies on government subsidies. However, under the temptation of substantial subsidies, Changjiang and other companies cheated on the subsidies.

The CCP’s official media reported that many new energy vehicle companies earned the difference between subsidies and vehicle manufacturing costs.

In 2016, the Chinese communist Party investigated the subsidies of 93 new energy vehicle companies. It found that as many as 72 fraudulently obtained subsidies, and the amount was almost $1.36 billion (9.3 billion yuan).

The Chinese media said that from 2015 to 2017, the total subsidies for the entire Chinese new energy vehicle industry exceeded $43.82 billion (300 billion yuan).

However, Changjiang‘s bankruptcy exposed the fact that China’s new energy vehicle industry could not last long without the support and subsidies from the state. Technology and professionalism are the real foundation of success.

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