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Chinese leading electric car manufacturer BYD received direct state subsidies of approximately EUR 220 million in 2020, rising to EUR 2.1 billion in 2022. In terms of business revenues, direct subsidies increased from 1.1 percent in 2020 to 3.5 percent in 2022. This is the result of an investigaton by Germany’s Kiel Institute For The World Economy.
Additionally, BYD receives significantly more purchase premiums for electric cars in China compared to other domestic manufacturers like GAC or foreign companies producing locally, such as Tesla or VW’s joint ventures, the study says.
However, the figures clearly understate the true scale and scope of green technology subsidies in China, ss BYD also benefits from subsidies to battery producers through lower input prices, as well as subsidies to buyers of battery electric vehicles, thus stimulating demand.
China’s massive state subsidies are not limited to EV cars. According to a very conservative estimate, industrial subsidies in China amounted to around EUR 221 billion or 1.73% of Chinese GDP in 2019.
The authors urge the European Union to engage in negotiations with the Beijing government amidst the recently initiated anti-subsidy proceeding against imports of electric vehicles from China, aiming to persuade China to withdraw subsidies particularly harmful to the EU. Given China’s current macroeconomic weakness, its relative strength in green technology sectors, and its tensions with the US, the authors see a realistic chance of successful negotiations.
Next week, German chancellor is visiting China, accompanied by an induszry delegation.
What is sad is the US also funnels billions into the auto industry but we don’t even get affordable prices for our investment, let alone prices that would crush foreign competition.
US companies probably use those subsidies to raise executive pay & bonuses
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In that regard the U.S. system is very much the same as China’s, but that aside there are major important differences.
[Edit typo.]
Does China have a predatory car dealership model similar to the USA?
If we eliminated them, car prices would be competitive. They provide nothing of value and just siphon off money.
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In the US, people working in the auto industry are largely unionized and getting pretty decent pay and benefits too. The US also has pretty strict safety standards that require planning and testing that cost a ton of time and money.
Thanks to the recent strikes we all know what a small percentage of their revenue goes to the workers. They are also why banning Chinese imports has validity. But lack of competition leads to 7 year car loans.
A relative of my buddy just got a 10-year car loan and she is going to be paying more than the car is worth in interest in that time.
This hurts my feelings.
And they use that to get people to think it’s ok for the prices and even defend them, despite record profits across the industry.
But a large percentage of those billions goes into billionaire pockets and much of that is then spent on campaign contributions and lobbying, thus completing the cycle of laundering our tax money.
We are food for the rich.
This. And the same applies to Germany where the study originates.
Because that’s not an investment, it’s a donation.
Won’t anybody think of the poor shareholders?
Why would they need to crush foreign competition? Biden already revoked the subsidies for them. And in unrelated news Ford and GM decided American EVs can just be bad.