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China Heavily Subsidized BYD to Expand Its EV Market Share

The Chinese government has granted direct subsidies of at least $3.7 billion (3.4 billion euros) to EV manufacturer BYD, which has been one of the main beneficiaries of China’s massive subsidies for green technologies, a German think tank that advises the government said in a new report on Wednesday.

China has recently hiked direct government subsidies to some of the dominant Chinese green-tech companies, the Kiel Institute for the World Economy, IfW, said in the report.

For example, direct subsidies to the car maker BYD, a major beneficiary of the subsidies, were estimated at around $239 million (220 million euros) in 2020, the Kiel Institute has estimated. These direct subsidies surged to as much as $2.3 billion (2.1 billion euros) in 2022, for a cumulative direct subsidy of just over $3.7 billion (3.4 billion euros) between 2018 and 2022.

“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.

“China's subsidy policy has been a controversial issue for years: European industries often struggle to compete with Chinese counterparts on price,” said Dirk Dohse, Research Director at the Kiel Institute and co-author of the report.

“However, without China's subsidized technology, products crucial for Germany's green transformation would become more expensive and scarce as well,” Dohse added.

European carmakers are already spooked by Chinese EV manufacturers’ plans to boost sales in the EU.  

In October, the EU launched anti-subsidy investigations into EU imports of battery electric vehicles (BEVs) from China to determine whether BEV value chains in China benefit from illegal subsidization and “whether this subsidisation causes or threatens to cause economic injury to EU BEV producers.”

The findings of the investigation will establish whether it is in the EU's interest to impose anti-subsidy duties on EV imports from China, the European Commission said at the time.

The EU probe into the Chinese subsidies is ongoing and set to conclude by November, but the bloc could impose tariffs as early as in July.  

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By Tsvetana Paraskova for Oilprice.com

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