The German Kiel Institute has published a report in which it concludes that BYD received 2.1 billion euros in 2022 in subsidies from the Chinese government. This could be interpreted as a clear advantage to dethrone other foreign manufacturers.
The attempts of the Chinese automotive industry to conquer a market as demanding, and at the same time lacking in cheap cars, as Europe is crossing borders. And not only physically because of the arrival of these new manufacturers, but because even the Chinese government is playing its role in making this landing on the Old Continent possible.
The influential Kiel Institute in Germany has just published a report in which it concludes that BYD received 2.1 billion euros from China, money that could be considered an advantage with which it could take down Tesla and other Western manufacturers.
The study indicates that China spends between three and nine times more on subsidies than other countries in the Organization for Economic Cooperation and Development (OECD), such as the United States and Germany. According to the report, the main recipient of this public aid from the Chinese government would have been the electrified car and battery manufacturer BYD.
Is aid from the Chinese government catapulting BYD to success in international markets?
In 2023, BYD became the world's leading electric car manufacturer, surpassing Tesla for the first time. However, part of this achievement could correspond to subsidies from China. In 2020, BYD received around €220 million in direct aid, while in 2022 this figure increased to €2.1 billion.
This represented around 1.1% of BYD's revenue in 2020, and 3.5% in 2022, according to the Kiel institute. These figures are high even for Chinese car manufacturers, since BYD would have surpassed competitors such as GAC, one of the main recipients of government aid.
And these million-dollar aid would not be the only way in which BYD benefits from the generosity of the Chinese government. The company also gains benefits from customers receiving official incentives for the purchase of its electric car batteries. Although it is not an income of money, it does help stimulate demand for its products, thus allowing its price to be reduced.
The German institute also notes that 99% of listed companies in China received government incentives in 2022, so BYD is not the only company to benefit.
In Europe, car manufacturers have complained that subsidies granted to Chinese brands make it difficult for them to compete with electric vehicles coming from the Asian country, such as those sold by companies such as BYD, MG or Geely.
For its part, the European Union has launched an investigation into Chinese incentives to see if they give Chinese manufacturers an unfair advantage over competitors. The conclusions reached by the German institute's report seem to support this accusation.
It is worth remembering that the major offensive that China is launching on the European market with its cars is altering competitiveness, with prices significantly lower than those usually offered by brands from Europe, the United States, South Korea and Japan.