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
US companies probably use those subsidies to raise executive pay & bonuses
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.
deleted by creator
What about …
Commenting on your own posts with your alt account is bad form.
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.
i don’t love china but “we must stop them from checks notes subsidizing green energy” is bizarre
Yes – the answer should be our own green energy campaign.
But we can’t afford that. We somehow need to subsidize fossil energies after all, because of the economy!
/s obviously
Why can’t our own green energy campaign be additive instead of combative with other initiatives?
China is trying to build hegemonial economic power, with Chinese products being an integral component of every future supply chain. Green technologies are an excellent vehicle for that, because they’re fairly future-proof and will see extreme growth.
But sure, the EU needs an equivalent to the US’s IRA if it wants to have any industry or political/economic independence going forward.
I’m sorry, I’m afraid that has already happened?
What exactly is being manufactured outside China? How many items in your household are not from China?
China owns a lot of manufacturing capacity for basically everything already, correct. However, in most of these industries there are alternative supply chains, often a bit more expensive and a lot lower-capacity. But if in the future, China is the only country that can produce certain goods at all because e.g. they have the only scientists who know their way around a certain technology, then that’s a different situation still.
(Also, quite a few things here are not made in China, including recent buys. That list excludes most electronics though, I give you that.)
I mean the price was the only reason it all moved there. I will always support any movement that would change that.
But I can’t help but feel that the only blame is on the capital leaders, who did that. China is just doing what they get paid to do, and we collectively give them the money.
Cars are not “green energy”.
Every country subsidizes their own auto industry. Every single one of them.
Ssssshhhhhh!!! We’re having a circlejerk here!
Most countries don’t allow slave labor throughout their supply chain.
Teslas built in China for China can’t match the costs per unit of BYD. The Chinese government is playing king maker to an absurd degree.
Uhm, the United States, with 13th amendment?
Can you show me the prisons assembling lithium battery cells?
Kind of interesting actually. They don’t mention any cars specifically but they throw the Air Force under the bus.
So isn’t this similar to the US Chips act… Funnel billions into an industry that the country sees as nationally important.
Doesn’t the EU do this with its farm subsidies? Ensuring Europe can feed itself if it needs to…
But what about times two.
What a major embarassment for EU. China benefitting the climate by getting fossil fuels off the roads. And EU throwing a tantrum to try and stop them.
There are some comments like this, suggesting that the commentators didn’t even click the link.
China is investing government money into electric car companies so they can produce more of them for cheaper. this gives them a competitive edge against electric car companies in EU that arent being bolstered by government subsidies. The EU has two options: one, the environmental option, they compete by subsidizing their own car companies to produce electric vehicles, which would accelerate the effort to stop relying on fossil fuels and reduce emissions by having two regional markets focused on vehicle electrification. Or two, the capitalism option, they compete by pressuring China to drop their subsidies, which would slow down efforts to stop relying on fossil fuels as neither regional market is focused on vehicle electrification.
from your article, “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.”
ensuring we stay on track for the absolute worst timeline for humanity.
China is investing government money into electric car companies so that they can produce more if them cheaper …
Your positive framing of China’s economic policy is completley out of touch. It really helps to read more than a few lines of a post. The negative consequences of Chinese subsidies are obvious in tbe country’s domestic market, and there’s no reason to copy that for the world.
China’s EV price war is killing brands and infuriating consumers
China’s EV market has slowed down as consumers cut spending in a post-pandemic economy.
Brands are fighting a fierce price war in a crowded industry, leading to fast depreciation of electric cars.
Some startups are on the brink of collapse, leaving software maintenance in limbo.
And this is just one example. Read the study, find more research, tere is a lot.of it.
Man thats a weird article trying to frame cheaper EVs as a terrible thing. Chinas EV market is by far the largest and fastest growing in the world, by a huge margin.
Chinas EV market is by far the largest and fastest growing in the world
Did you read the articles?
Chinese EV car manufacturers are making losses, some already filed for bankrupcty, practically all survive on state subsidies. Chinese customers are left behind with no after-sales services and software updates.
basically a lot of companies attempted to get into the game but were crushed by BYD. an effect of going bankrupt early on because you didnt have enough customers is…you didnt have a lot of customers. So customers left without support are a small minority. The companies responsible for China’s massive EV growth are alive and well.
The companies responsible for China’s massive EV growth are alive and well.
Which ones?
BYD is the one which is ‘alive’ as they live heavily on state subsidies (their subsidies have at least ten-fold since 2020).
HiPhi, once a promising start-up, Baidu-backed WM Motor, Tencent’s Aiways - all ran out of liquidity to sustain operations. Other brands such as Levdeo and Singulato entered bankruptcy proceedings.
Which ones are doing well? There are none, even the Chinese government appears to have given up on these companies as they appear to focus solely on BYD given a strong deflationary domestic market.
Weve got just wildly different priorities. You say depreciation, i say more affordable. My priorities arent for rich people to make more money, i dont care that startups are falling behind, i dont care that someone bought in before a price drop. China’s ev market has “slowed down” to a growth rate that still dwarves the rest of the world, after a crazy and unsustainable gold rush.
The bottom line is more electric vehicles, less fossil fuel vehicles. Thats it, thats the goal.
Meanwhile the country I live in in Europe is stopping all tax incentives next year on EVs and the taxes might even be higher since they’re based on weight and EVs are heavier.
Best of luck: this person uses their @[email protected] and @[email protected] accounts to post anti-China articles like it’s their day job. Worse, really, as they do it on the weekends, too.
Terrible, will probably have a big impact on super yachts sales as well.
220M, a fraction of what we spend on “defense” or give to Israel annually
