Chinese EV Scandal? Zeekr, Neta Accused Of Gaming Sales With Pre-Insured Cars

Chinese EV manufacturers Neta and Zeekr are reportedly inflating sales figures by pre-insuring vehicles before actual sales, a tactic allowing them to count deliveries early under Chinese registration rules. Neta allegedly used this method for over half its reported sales from January 2023 to March 2024, totaling at least 64,719 cars, with its parent company recently entering bankruptcy proceedings. Zeekr employed a similar strategy, leading to a surge in December 2024 Xiamen sales where few vehicles were actually registered. This practice, driven by intense market competition and overcapacity, has drawn criticism from state media and regulators, with China's industry ministry reportedly planning a ban on the resale of newly registered cars within six months, raising concerns about the transparency and reliability of sales data in the sector.

Analysis

Chinese EV manufacturers Neta and Zeekr are facing significant scrutiny over allegations of artificially inflating sales figures. The practice involves pre-insuring vehicles to recognize them as deliveries under Chinese registration rules, a tactic reportedly driven by intense market competition and chronic overcapacity. For Neta, this method allegedly accounted for over half its reported sales from January 2023 to March 2024, totaling at least 64,719 cars, a situation culminating in its parent company entering bankruptcy proceedings. Zeekr (ZK) reportedly employed a similar strategy, evidenced by a December 2024 sales surge in Xiamen to 2,737 vehicles, while city records showed only 271 license plate registrations for that month. The company's official response—that the cars were insured for showroom display—fails to directly address whether they were counted toward retail sales figures. This issue has escalated to the regulatory level, with China's industry ministry reportedly planning to ban the resale of newly registered cars within six months, which would directly curtail this practice and poses a material risk to companies relying on it. The strong negative sentiment score of -0.7 for ZK contrasts sharply with its 10.9% stock price increase in 2025, suggesting the market may not have fully priced in the potential impact of these governance issues and impending regulatory action.

Key Decisions for Investors

• Given the severe allegations of sales manipulation and the impending regulatory crackdown, investors should view Zeekr's (ZK) reported sales figures with extreme skepticism and exercise caution, as the stock appears vulnerable to a significant correction if the negative information becomes more widely priced in.
• The bankruptcy of Neta's parent company serves as a critical warning; investors should reassess exposure across the entire Chinese EV sector, as the practice of inflating sales may be systemic, masking true demand and financial health.
• Monitor for official announcements from Chinese regulators regarding the proposed ban on reselling newly registered cars and scrutinize upcoming delivery reports from Zeekr, as these will be key catalysts determining the company's operational transparency and future viability.