The Chinese government is investigating the new energy vehicle industry to see if there is overcapacity in the sector, said Song Qiuling, deputy director of the Economic Construction Department in the Finance Ministry, Yicai.com reported.

Wang Bing, an expert in new energy vehicle technology recognized by the Ministry of Science and Technology, said those companies who were granted the new energy automaker licence but did not conduct R&D or establish production will be the focus of the investigation.

“They actually didn’t plan to invest in the sector, but wanted to make a profit by reselling,” Wang added.

Also, some companies entered the new energy vehicle sector with a lack of technology and production capacity, with an intent to swindle the subsidies, the report alleged.

There were more than 200 new energy vehicle manufacturers set up over the past two and a half years, totalling an investment of one trillion yuan.