On Thursday, Great Wall Motor (601633. SS) reported BYD (002594. SZ) to China’s regulators, alleging that its two top-selling hybrid models did not fulfill pollution rules.
BYD said its vehicles met China’s emission requirements and that it would sue Great Wall.
The public claim from Hebei-based Great Wall, China’s first listed auto producer, has put it in an unusual, open war with BYD, the country’s largest and most successful electric and plug-in hybrid vehicle maker and Tesla (TSLA.O) rival.
Great Wall Hong Kong shares fell 7.3%. BYD Hong Kong shares declined 5.4%.
Great Wall Motor said on its WeChat account that BYD’s two plug-in hybrid vehicles failed pollutant emissions regulations.
Reuters received no response from the three federal entities.
“We firmly oppose any kind of unfair competitive behaviour and reserve the right to sue,” BYD added.
Great Wall Motor accused BYD of employing non-pressurized fuel tanks in its Qin Plus and Song Plus plug-in hybrids, which dissipate liquid faster.
BYD’s best-selling SUV is the Song. Its best-selling sedan is the Qin.
Great Wall did not present proof or explain why regulators had missed any issue.
Because plug-in hybrids can run on electric power alone, gasoline stays in the tank longer than in an internal combustion engine vehicle, causing fuel tank pressure issues.
Hybrids and plug-in hybrids employ pressurized tanks to limit fuel evaporation and meet emission standards.
BYD called Great Wall’s testing invalid. Instead, great Wall appears to have bought BYD vehicles and conducted its tests without third-party inspection based on China’s larger test distances.
Berkshire Hathaway-backed BYD welcomed a regulatory inquiry.
“We hope everyone will act in a way that is beneficial to the industry and Chinese brands,” BYD added. “New energy vehicle development has been difficult.”
BYD has been criticized for battery fire hazards. After discovering water might enter the Tang DM’s battery pack, the manufacturer increased its recall last year.
Berkshire Hathaway owns just under 10% of BYD’s Hong Kong-listed shares.