BYD Profits Decline After Subsidy Cuts In China

APR 29 2018 BY MARK KANE 5

Previous and the latest Chinese adjustment for New Energy Vehicles subsidies makes earning on plug-in cars challenging.

BYD already proposed to increase incentives, but as subsidies are lower, profitability is decreasing by up to around 90%.

BYD plug-in electric car sales in China – February 2018

“(As we are) affected by reduction in new energy vehicles (NEVs) subsidies, the profitability of the business, especially for electric buses, has declined substantially so as to bring great pressure to the group’s overall profit,” BYD said.

The company expects its first-quarter net profit to slump 75.2-91.8 percent from a year ago due to the subsidy cuts.

That would put profits for the three months to March between 50 million yuan ($7.96 million) and 150 million yuan, versus 605.8 million yuan a year ago.”

Lower-range NEVs and some electric buses were affected by the cuts, while the longest-range NEVs enjoys higher subsidies. For BYD, the current situation brings 10% decline on the stock market.

Read Also – Hong Kong Lightens Electric Car Purchase With ICE Scrappage

We are not so sure whether the Chinese government will be able to manage the NEVs market through manual-control. In the end, some businesses will win or lose depending on the changes and the risk is high right now.

Source: Reuters

Categories: BYD, China


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5 Comments on "BYD Profits Decline After Subsidy Cuts In China"

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“That would put profits for the three months to March between 50 million yuan ($7.96 million) and 150 million yuan, versus 605.8 million yuan a year ago.”

That is pretty small profit for a decent sized company. Surprised that it is so low.

BYD is losing subsidies a couple of ways by being heavy in PHEV instead of BEV and the PHEV took bigger subsidy hits…
BYD is also losing subsides by using a lower power density battery which does not get full subsidy money but they are switching those this year…
I really like BYD but I no longer think they are on the right path since they are PHEV heavy and China buyers prefer BEVs according to the actual sales…
I also dont like BYD trying to be more up market and performance along with being everything to everyone making ICE, PHEV and BEV vehicles since they are relatively small in terms of scale…
But BYD real issue is just starting this year and next and that is completion from every angle..
BYD did release some new and updated models at the Beijing auto show but their big Chinese competition was displaying 5 new BEVs each…
With the EV mandates in China starting next year their are a lot of companies that have to sell a lot of EVs giving BYD competition they never had and I dont think they can deal with it in the long run…

Where 1.6 million people are killed by pollution, there is no way a company can freely sell gas guzzlers.
And they cannot keep milking their government for subsidies. Either sell more EVs or stop selling gas guzzlers.

All along, BYD sold more plugins than EVs and the new subsidy practice is hurting them.
Redesign the e6 SUV with better range, price it affordably and sell more EVs. That’s it.

What will happen when Tesla hits 200,000?

Seems to me that BYD’s biggest problem is China’s increasingly stringent ZEV mandates that will cause the market to be flooded by ZEVs from all other carmakers. Maybe it could build cars for other carmakers in need of compliance cars?