Shares of Chinese electric-car makers have recently fallen after a report that said regulators may cut subsidies further on the embattled industry was published.
Maker of new energy vehicles BYD Co. reportedly slid 2.8% in Hong Kong. BAIC BluePark New Energy Technology Co., the country’s biggest maker of pure electric cars, retreated 2.9% in Shanghai, while Contemporary Amperex Technology Co. Ltd., the world’s biggest car-battery maker, dropped 2.5%.
Bloomberg reports China will gauge demand for electric vehicles before making a decision on whether to cut subsidies for the automobiles again. The government, which began subsidising electric vehicle purchases in 2009 to promote the industry, has been gradually reducing handouts to encourage automakers to compete on their own.
China’s car market is experiencing a prolonged slump that has dragged down the global electric vehicle sector, states Bloomberg, as the country accounts for about half of the world’s sales of electrified cars. Still, regulators continue to face pressure to reduce handouts as state support fuelled concerns about a bubble in the industry.
According to Bloomberg the latest funding cut took effect in June, when the government cut subsidies of as much as 50,000 yuan ($7,165) per electric vehicle by half. Chinese NEV sales then began falling in July and have been dropping since. China’s top electric vehicle makers have slashed earnings outlooks and analysts have recently questioned whether the likes of Tesla rival and Shanghai-based NIO Inc. will survive.