Fake NEV (New Energy Vehicle) Startups Land Grabbing and Subsidy Fraud: Exploiting the Pretext of Building Factories to Siphoning Government Land, Subsidies, and Financing

Who Gets Targeted

Victims mainly fall into three categories: First, local governments and investment promotion departments eager to complete industrial transformation indicators, who are attracted by rhetoric such as 'smart electric vehicles + full industry chain + hundreds of billions in output value,' providing low-priced land and matching subsidies. Second, retail investors and bond investors moved by the car manufacturing narrative, who bought concept stocks at high levels only to see market capitalization evaporate. Third, suppliers, contractors, and wealth management product buyers dragged down by associated guarantees. They often harbor anxieties such as 'large group endorsement means it won't fail' or 'it's too late if we miss the new energy wave,' yet lack the capability to verify production capacity and genuine orders, ultimately bearing full losses in a scam where 'car manufacturing is fake, raising funds is real.'

骗局怎么运作

• Step 1: Packaging the cross-industry vehicle manufacturing narrative. Operators use slogans like 'All in on New Energy' and 'Three years to be globally leading,' announcing investments of tens or even hundreds of billions of yuan to build smart electric vehicles. Press releases often use rhetoric like 'the world's largest and most powerful new energy vehicle group,' exploiting the public's blind spots regarding industry knowledge to create an illusion of technological leadership.
• Step 2: Rapidly accumulating 'evidence of strength' through acquisitions and press conferences. Batch-acquiring overseas scattered automotive technology companies, battery plants, and sales licenses, then holding grand press conferences to release six or more models at once, using leased show cars and model cars to put on a facade and create an atmosphere where 'everything is ready except mass production.'
• Step 3: Grabbing land and demanding subsidies from local governments under the guise of building factories. Simultaneously negotiating in multiple cities to land 'complete vehicle + component' bases, requiring governments to supply industrial and supporting residential land at low prices, inject industry funds, and offer tax incentives. In reality, construction sites remain fenced off without building for long periods or only construct sales offices, while residential land is developed first to recoup funds.
• Step 4: Inflating capital market valuation with false prosperity. Generating 'hot-selling orders' through related-party transactions, having employees and suppliers make internal subscriptions to boost sales volume, and releasing high-deposit posters, cooperating with the parent company to spin stories in the Hong Kong and A-share markets to boost market cap, and then channeling cashed-out funds back to shore up the real estate core business via equity pledges and bond issuances.
• Step 5: Executing a golden cicada shell escape after the capital chain breaks. When the real estate core business explodes, the automotive sector immediately grinds to a halt: supplier payments are defaulted on, employee wages are unpaid, and customers who paid deposits cannot take delivery of cars, ultimately entering bankruptcy liquidation procedures and leaving unfinished factories and private debts to be cleaned up by local governments and creditors.

红旗信号（看到这些快跑）

• 🚩 Proclaiming the simultaneous release of six or more vehicle models while failing to produce real production line videos from any location; show cars are photographed by the media as empty shells or with tires fixed with tape.
• 🚩 Claimed hundreds of thousands of 'large deposit' orders fail to correspond to verifiable insurance registration volumes and delivery volumes, and official channels cannot find genuine owner delivery records.
• 🚩 Vehicle manufacturing bases sign agreements with a multitude of cities, yet generally only hold ground-breaking ceremonies without equipment moving in, while supporting residential land is constructed and sold first.
• 🚩 Frequently using concept cars and niche overseas brand acquisitions as arguments for 'technological leadership,' while refusing third-party institutions to conduct actual tests on batteries and intelligent driving systems.
• 🚩 The parent group announces hundred-billion-level automotive investments despite exceptionally high liability ratios, with massive equity pledges and related-party guarantees existing between the automotive business and the group.
• 🚩 Pressuring suppliers and employees with 'internal car purchase quotas' to boost sales volume, forcing employees to take out loans to subscribe to the company's own cars.
• 🚩 Slowing down the construction pace immediately after government subsidies and land are secured, using 'the pandemic' or 'supply chains' as excuses to indefinitely postpone the mass production schedule.

真实案例

• According to a Toutiao report in August 2025, from its high-profile market entry in 2019 to initiating bankruptcy liquidation in 2023, Evergrande Auto burned through approximately 110.8 billion yuan over five years, ultimately delivering just over 2,800 electric vehicles. In 2024, it was court-ordered into compulsory liquidation due to insolvency, making the Hengchi brand a representative case of the bursting of the cross-industry auto bubble as its parent company collapsed.
• According to a NetEase report in 2025, core criticisms against Evergrande Auto included using auto show model cars as mass-production exhibition cars, inflating order data, and leveraging the car manufacturing concept to inflate market cap and fleece retail investors. As the case of the group's actual controller entered the review and prosecution stage, his ex-wife was exposed for spending heavily to acquire multiple luxury mansions in London, causing public outcry over the destination of the funds.
• According to a People's Daily report in September 2016, the Ministry of Finance released the results of its special inspection on NEV subsidy fraud that year, blacklisting five enterprises. Some enterprises defrauded subsidies by falsely reporting vehicle sales and remaining idle after registration without operation, with an average subsidy fraud of 300,000 to 500,000 yuan per bus, becoming an industry-pioneering case of 'car manufacturing by name, subsidy fraud in reality.'
• According to public reports, in December 2025, the land, factories, and equipment of Evergrande Auto's Tianjin plant entered bankruptcy liquidation proceedings, with assets to be disposed of to repay creditors, marking the complete standstill of its largest vehicle production base.
• In August 2020, China News Weekly reported on the major fiasco of Jiangsu Safilo (Suda) auto manufacturing: on April 27, 2020, Qiao Yudong, former senior legal manager of Jiangsu Safilo Auto, real-name reported Chairman Wang Xiaolin for suspected false technical capital contributions and misappropriation of massive state-owned assets—four foreign shareholders actually controlled by Wang Xiaolin used false technical capital contributions valued at 6.6 billion yuan to defraud company shares and gain control, while the sole state-owned shareholder Nantong Jiahe had provided 6.6 billion yuan in funds. Safilo, having burned through 6.6 billion yuan, sold only 31 cars with its factory floor shut down, yet the chairman claimed 'zero responsibility.' (Source: [https://news.qq.com/rain/a/20200810A030F400](https://news.qq.com/rain/a/20200810A030F400))

Official Stance

• In September 2016, the Ministry of Finance released the special inspection findings on the promotion and application subsidy funds for new energy vehicles, exposing five enterprises for subsidy fraud, recovering funds, and revoking qualifications, explicitly listing 'vehicles with batteries missing, labels not matching reality' as key targets for crackdown.
• Starting in 2019, the Ministry of Industry and Information Technology and the State Administration for Market Regulation jointly conducted safety hazard investigations and production consistency supervision inspections on new energy vehicles multiple times, requiring local governments to clear out enterprises that have been shut down for long periods or lack production conditions.
• From 2023 to 2024, courts in various regions issued bankruptcy liquidation rulings against Evergrande Auto-affiliated companies and opened public creditor filing channels, with the judicial system using typical cases to warn against 'debt expansion risks under the guise of major industrial projects.'
• In March 2026, while cracking down on cases where AI was used to fabricate rumors regarding auto company operations, the Shanghai Municipal Public Security Bureau emphasized implementing two-way governance on false information involving auto companies, objectively reminding the public to discern exaggeration and fraud in auto company publicity.

How to Protect Yourself

• ✅ Before introducing vehicle manufacturing projects, local governments and industrial parks should commission third parties to verify enterprises' genuine production capacity, patent validity, and parent company cash flow, tying subsidy disbursements firmly to 'actual delivered insurance-registered volumes' rather than contracted amounts.
• ✅ Individual investors should remain vigilant when encountering the combination of 'cross-industry manufacturing + massive market cap + high parent company debt,' checking related-party transactions, equity pledge ratios, and genuine delivery data in Hong Kong or A-share announcements before deciding whether to buy.
• ✅ Suppliers should require staged settlements before undertaking orders from new-force auto companies, collect an advance payment ratio of no less than thirty percent, and check the counterpart's litigation and enforcement records to avoid having delayed payments drag down their own cash flow.
• ✅ Prospective car owners should confirm that a brand has completed mass production and delivery for over a year, possesses genuine owner word-of-mouth and after-sales service networks, before paying deposits, and stay alert to unofficial channels such as 'employee internal purchase transfers' or 'low-deposit quota deals.'
• ✅ Clues indicating that enterprises are grabbing land and remaining idle under the guise of car manufacturing, or suspected of subsidy fraud, can be reported under real names to local industry and information technology departments, the Supervision and Evaluation Bureau of the Ministry of Finance, or the 12345 hotline, while retaining promotional materials as evidence.