The Thai government plans to revise its rules on subsidy payments to battery electric vehicle (BEV) manufacturers in response to the recent problems faced by the local subsidiary of China’s Hozon New Energy Automobile Company and its Neta Auto brand, according to local reports.

Hozon is struggling to stay afloat and is facing a bankruptcy review in China. The automaker, which has been cutting costs as its global sales continue to decline, hopes to raise cash in a forthcoming Series-E fundraising round to help improve cashflow.

Hozon’s Thai subsidiary, Neta Auto Thailand, has missed its local production commitments which qualified it for subsidies under the Thai government’s EV3.0 incentive programme. The company has been slashing prices in recent months to help lift its local sales.

Under the EV3.0 programme, BEV manufacturers are granted government subsidies of up to THB 150,000 (US$ 4,600) per vehicle during the initial “ramp-up” phases of their projects, during which they are also allowed to import a quota of vehicles duty-free.

BEV makers receiving the subsidies are committed to producing 1.5 vehicles for every imported vehicle. To meet its government subsidy commitments, Neta must therefore produce 19,000 BEVs this year – but so far it has only produced 4,000 units.

Neta Auto has already received more than THB 2 billion in subsidy payments from the Thai government and the company recently met with the Thai Excise Department to be told the disbursement of a further THB400 million subsidy payment would be suspended.

Deputy Finance Minister, Paopoom Rojanasakul, confirmed that the Thai Ministry of Finance has asked the National Electric Vehicle Policy Committee to revise its rules in light of Neta Auto’s difficulties. The Ministry has recommended a rule change requiring BEV manufacturers to submit a “compensatory” production plan every two months, which would allow the government to suspend subsidy payments at a much earlier stage on if production commitments are not met.