China’s BYD Receives Billions in Subsidies, Study Finds

Germany’s Kiel Institute recently revealed that BYD, the Chinese automotive giant, received a staggering $2.26 billion in direct subsidies from China in 2022. The company also benefits from indirect subsidies, particularly in its EV battery business. This revelation comes as China outspends other OECD countries on subsidies, with BYD emerging as a primary beneficiary.

BYD’s Rise to Prominence

BYD has quickly become one of the world’s leading manufacturers of electrified vehicles, surpassing Tesla in the last quarter of 2023. However, this success has been supported by significant government assistance. In 2020, BYD received around €220 million in direct subsidies, a figure that soared to €2.1 billion by 2022.

Implications for the EU

The Kiel Institute’s study highlights the impact of Chinese subsidies on the global automotive market. With China’s economic downturn, the EU now has an opportunity to negotiate with Beijing on a level playing field. The study suggests that these subsidies give Chinese automakers an unfair advantage in foreign markets, prompting the EU to investigate further.

Challenges and Opportunities

While BYD remains a major recipient of government funds, it is not alone. The study found that 99% of listed companies in China received incentives in 2022. As Chinese automakers seek to expand into foreign markets like Europe, the issue of subsidies becomes increasingly contentious.

As the EU considers tariffs on Chinese EVs, negotiations with Beijing could lead to a more equitable playing field. The Kiel Institute’s findings underscore the need for transparency and fair competition in the global automotive industry.