Anhui Jianghuai Automobile Co has stopped producing an electric SUV equipped with Samsung SDI Co batteries on concern it may be stuck with unsold stock if the model is disqualified from government subsidies because the South Korean supplier isn’t on a list of approved vendors.
The Chinese carmaker will resume manufacturing the iEV6s sport utility vehicle, its most expensive electric model at 234,800 yuan ($35,000) before subsidies, only after Samsung SDI makes it to the government’s approved list, according to Wang Fanglong, a Jianghuai Auto executive in charge of new-energy vehicle research and development.
“We are cautious about selling iEV6s because of the huge policy risks,” Wang said in an interview. “The policy may change any time.”
China has used a combination of subsidies and directives to push local governments, automakers and consumers to embrace the use of electric vehicles, which are seen as a way to reduce air pollution while serving the strategic goal of cutting oil imports. State incentives are coming under increased scrutiny amid a probe into funding fraud and as the government weans companies from handouts to speed up improvements in technology.
Samsung SDI and LG Chem are among foreign battery makers that have not made the list of suppliers qualifying for subsidies, despite producing the power units in China.
“Domestic automakers have been favouring Korean and Japanese makers because prices are lower and the batteries have better performance,” said Wang Liusheng, a Shanghai-based auto analyst with China Merchants Securities Co. “To a certain extent, most of them are worried about the battery regulations.” The Ministry of Industry and Information Technology, which oversees the qualifying list of suppliers, didn’t immediately respond to a faxed request for comment. The regulator asked battery makers in May 2015 to submit to a quality review and has since affirmed 25 companies in three separate batches.
Representatives for Samsung SDI and LG Chem said the companies will supplement their application documents after failing to get approved in June. Both are absent from a wait list of 32 companies released last month. Besides Jianghuai, Samsung SDI also supplies batteries to Zhengzhou Yutong Bus Co and Beiqi Foton Motor Co, while LG Chem’s customers include SAIC Motor Corp, FAW CAR Co, Great Wall Motor Co and Chery Automobile Co.
Jianghuai’s shares fell 0.3% in Shanghai trading, while the benchmark Shanghai Composite Index gained 0.2%.
Jianghuai put iEV6s on centre stage in its debut at the Guangzhou Auto Show in November. The all-electric SUV was billed as a premium offering able to clock 251 kilometres (160 miles) on a single charge. In April, President Xi Jinping got behind the wheel of the SUV at Jianghuai’s headquarters while on an inspection tour of Anhui province, where the company is based.
The sales have so far failed to match the high profile. Jianghuai delivered a total of 1,858 units of iEV6s from March to May, according to China Passenger Car Association.
Even if the automaker decides to replace Samsung SDI with a local battery supplier, the performance won’t match the Korean company’s, Jianghuai’s Wang said. Jianghuai’s lower-priced iEV6e model, scheduled to begin production in September, will use batteries made by Hefei Guoxuan High-Tech Power Energy Co, a domestic battery maker that received its certification from the ministry in January.