BYD has received billions of euros in subsidies from the Chinese government

A new study conducted by one of the oldest and most influential institutions in Germany, the As an Institutionshows that China uses trade subsidies three to nine times more than other OECD countries such as the United States and Germany. According to the study, the main recipient of the Beijing government’s generosity is a car manufacturer and a battery manufacturer. BYD.

BYD has become one of the largest producers of electric vehicles in the world in just a few years, surpassing Tesla for the first time in the fourth quarter of 2023, but in this exploitation it received significant financial support from the government. According to a study by the Kiel Institute, in 2020 BYD received approximately 220 million euros as direct subsidies. In the period of 2022This figure has increased significantly 2.1 billion euros.

Subsidies which, according to researchers at the Kiel Institute, amounted to approximately 1.1% of BYD’s revenue in 2020 and 3.5% of revenue in 2022. Even among Chinese companies this value is very high, and BYD has overtaken local competitors such as GAC as the main recipient of direct subsidies from the Beijing government.

Indirect support

However, as large as these figures are, they do not show the full picture of government aid to Chinese companies. In addition to the subsidy it receives directly from the government, BYD also benefits from it motivation that the Government recognizes for buyers for the purchase of batteries for electric vehicles. Even if it’s not cash flow that ends up in the company’s coffers, it’s still an addition. demand stimulus of its products, helping to reduce their prices.

Although BYD receives a large amount of government funding, China provides subsidies to various companies. The Kiel Institute discovered that 99% of listed companies in the country received government subsidies in 2022.

International competition

The data derived from this study opens up the ambiguities regarding compliance fair competitionThis is when Chinese car manufacturers are trying to expand abroad, starting in Europe. On several occasions, automakers from the Old Mainland have complained that the heavy subsidies given to Chinese manufacturers “distort” the market and make it difficult to compete with electric vehicles produced by BYD and other Chinese manufacturers that are important in Europe.

European industry fears about the Chinese threat

Some time ago, the European Union launched an investigation into Chinese government subsidies, to see if the aid gives the country’s automakers an unfair advantage in the international market. A fear that seems to be confirmed by the results of the Kiel Institute’s research, while the latter want the European Union to deal with the issue now, due to a more stable negotiating position due to China’s current economic recession.

Electric car maker BYD is one of the biggest beneficiaries of the massive government subsidy #China in green technology.👉 Grants are available everywhere in 🇨🇳 & focus on critical technologies; The EU should consider subsidies that are harmful to them… pic.twitter.com/rzyD4244Bj

– Kiel Institute (IfW Kiel) (@kielinstitute) April 10, 2024