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World

China weeds out 'phantom' green car producers

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World

China weeds out 'phantom' green car producers

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COMING UP:China weeds out 'phantom' green car producers

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00:00:02
>> After several years and billions of dollars in subsidies, China is squeezing the market on electric cars. Phasing out funding and slapping new rules on anyone making EVs in the world's number one auto market. Beijing has been trying to cut fuel imports, clean the air and even rival the US on green tech innovation.
00:00:20
It's been throwing a lot of money at startups to try and make that happen. But Jake Spring reports from the Guangzhou Auto Show, those plans have badly backfired.>> China spent $4.5 billion on EV subsidies last year for electric cars. And then earlier this year, they announced an investigation and recently announced the results of that investigation into the 90 companies, saying they had found widespread cheating of these subsidies.
00:00:46
Some companies were completely making up that they were making cars at all. Some were just selling the cars to themselves and collecting the subsidy, a host of different problems.>> Now Beijing is cracking down on smaller, weaker firms in the EV market. To apply for a license to make electric cars, companies must produce at least 15 vehicles for trial runs and pass stringent new safety tests.
00:01:09
A far cry from the days when companies flooded in to take advantage of government handouts.>> Pretty soon it's gonna be impossible to make your own EV startup, so we're entering a period where people are gonna go bankrupt. Maybe they'll put out one car and if it's not a success, they'll disappear.
00:01:26
So we're entering this winnowing period of whittling down the number of firms to really the strongest.>> Some startups tell Reuters they're putting off meeting the pricey new regulations, opting to spend money on R&D instead. But experts say that could be a big risk further down the line because Beijing may simply refuse to issue license plates for any vehicle made by a company that doesn't play ball.