Neta Auto Sales Fraud: The Shocking Collapse of a Former EV Champion

In the hyper-competitive arena of China’s EV market, sales figures are everything. But what happens when those figures are built on a lie? This is the story of Neta Auto, a brand that soared to the top in 2022, only to come crashing down amid a devastating Neta Auto sales fraud scandal.

The “Ghost Sales” Scheme Revealed

In 2022, Neta Auto was crowned the sales champion among Chinese EV startups, selling over 152,000 units. However, a recent investigation by Reuters has unveiled a shocking truth. The company systematically inflated its sales figures by pre-insuring vehicles before they were actually sold to customers. This practice, known as creating “zero-kilometer used cars,” is strictly forbidden in China.

According to internal documents, Neta fabricated at least 64,719 sales between January 2023 and March 2024—more than half of its total reported sales during that period. The champion’s crown was, it turns out, an illusion.
([Source] Reuters: How a Chinese EV darling misled investors ahead of an IPO – DoFollow Link)

Why Did It Happen? A Cascade of Strategic Blunders

Neta’s downfall wasn’t just about fraud; it was rooted in critical management failures:

1. Missed Opportunities: The company reportedly rejected partnership offers from global giants like Volkswagen and Stellantis, who later invested in competitors Xpeng and Leapmotor.
2. Flawed Product Strategy: Management prioritized the niche Neta GT sports car over a mainstream SUV, completely missing the market’s biggest trend.
3. Financial Ruin: Facing staggering losses (a cumulative $2.5 billion from 2021-2023) and negative gross margins, the company resorted to desperate measures to feign growth.
   (For more on market dynamics, see our previous post: [Analysis of China’s EV Subsidy Policy Shift] – Internal Link example)

The Emperor’s New Clothes are Gone

The fallout has been catastrophic. Sales have plummeted, and Neta’s parent company entered bankruptcy proceedings last month. Warehouses are reportedly filled with unsold “ghost cars.”

The Neta Auto scandal serves as a stark cautionary tale for the global EV industry. It’s a brutal reminder that without transparency and a sustainable business model, even the most spectacular success can prove to be nothing more than a house of cards.