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Shanghai Subsidy Cuts for BYD New Energy Vehicles Results in Sales Plunge

published: 2016-08-01 17:46

BYD confirmed that subsidies of BYD new energy vehicles in Shanghai will be cut half to RMB 5,000 per car. This is the second subsidy reduction after the company lost RMB 20,000 local subsidies in Shanghai two months ago. BYD will be the first new energy vehicle company whose subsidies will be lowered once reaching a certain level of sales volume.

Starting from 2014, BYD has sold almost 40,000 units of new energy vehicles in Shanghai. According to the Shanghai municipal new-energy vehicle promotion office, local subsidies will have to be lowered to RMB 5,000 per car if sales volume surpasses 40,000 units. Some consumers worried this will increase the actual price if purchasing BYD’s new energy vehicles, and thus turned to other brands instead.

This brings down the sales for BYD in Shanghai. The company’s new energy vehicle sales have started to reflected a downtrend this year. Its market share has also been replaced by SAIC. Last year, BYD had outstanding sales performance in Shanghai’s plug-in hybrid market. But following higher technology threshold for Shanghai’s plug-in hybrid vehicles in April, BYD’s sales performance has weakened.

BYD’s weak performance in Shanghai has led to a plunge in BYD “Qin” sales. The company only sold 9,404 units of “Qin” in the first half of 2016; a 42.9% drop compared to 16,000 units same period last year. They also only sold 1,725 units of “Qin EV” – another type of BYD’s new energy vehicles.

In order to stimulate sales of “Qin” in Shanghai, BYD requested a joint subsidy of RMB 14,000 from manufacturers and distributors to cover the subsidy which they were unable to get from the government. However, BYD’s subsidies will be ended in late-July. Whether BYD will come up with larger subsidies later on? The company’s publicists said it will depend on market reaction.

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