China’s new energy car sector may be running out of juice, with cracks appearing throughout the supply chain as Beijing tries to wean the group from state support.

Some of the latest distress signs are showing up at battery maker BAK Power, which has failed to pay its suppliers to the tune of 900 million yuan ($127 million). Word of the company’s latest woes is coming from battery component maker Ningbo Ronbay New Energy Technology Co. Ltd., which disclosed BAK has to fully pay a 209 million yuan bill that came due on Monday.

Other BAK suppliers with similar unpaid bills include Zhejiang HangKe Technology Inc. Co. and Shenzhen Capchem Technology Co. Ltd., which have issued similar announcements.

A BAK executive blamed the issue on its own failure to get paid by the new energy vehicle (NEV) makers that are its main customers. Those include Hawtai Motor and Zotye Automobile Co. Ltd., which are just two of the nation’s bumper crop of producers that thrived on earlier generous state subsidies for both NEV manufacturers and buyers.

Beijing sharply cut back those subsidies midway through last year in an attempt to make the sector more self-sufficient. NEV sales have dropped sharply ever since. In the most recent month of May, NEV sales in China fell 21% from a year earlier to 82,000 units. Before that, sales had been declining by even larger margins for each of the eight previous months.

Contact reporter Yang Ge (geyang@caixin.com)

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