Chinese EVs Under Fire for Faking Sales with Pre-Insured Cars
The electric vehicle (EV) industry has been making headlines in recent years, with many countries transitioning to environmentally friendly transportation options. However, a disturbing trend has emerged in China, where two prominent EV makers, Zeekr and Neta, are accused of inflating their sales figures by pre-insuring unsold vehicles. This tactic, dubbed “zero-mileage used cars,” has raised concerns among regulators and investors, and could have significant implications for the industry.
According to reports, Neta used this strategy to boost its deliveries by over 64,000 vehicles, while Zeekr deployed it in Xiamen in late 2024. The practice involves insuring vehicles before they are sold to customers, which allows companies to report higher sales figures and boost their market share. However, this tactic is considered misleading and could lead to a loss of credibility for the companies involved.
Regulators are planning a crackdown on this practice, and Neta’s parent firm, XPeng, has already filed for bankruptcy. XPeng has denied any wrongdoing, but the incident has raised concerns about the transparency and integrity of the EV industry in China.
Zeekr, another company accused of using this tactic, claims that showroom insurance does not impact the new car status of their vehicles. However, critics argue that this is just a semantic argument, and that the practice is still misleading and unfair to customers.
The zero-mileage used car phenomenon is not unique to Zeekr and Neta. Other Chinese EV makers, such as Li Auto and BYD, have also been accused of using similar tactics to inflate their sales figures. The practice has become so widespread that it has been dubbed “China’s version of the subprime mortgage crisis.”
The consequences of this practice could be severe. If regulators crack down on the industry, it could lead to a loss of confidence in the EV sector and a decline in sales. This could have significant implications for the industry’s growth and development.
The zero-mileage used car phenomenon is not only a problem for the EV industry, but it also raises concerns about the integrity of the financial markets. Investors rely on accurate and transparent financial reporting to make informed decisions about their investments. However, if companies are inflating their sales figures, it could lead to a loss of trust in the financial system.
In conclusion, the practice of pre-insuring unsold vehicles and reporting them as sales is a serious issue that could have significant implications for the EV industry and the financial markets. Regulators must take action to crack down on this practice and ensure that companies are operating transparently and honestly.
