GUANGZHOU -- BYD, China's leading manufacturer of electric vehicles, recently received 1.34 billion yuan ($191 million) in government subsidies as it grapples with a reduction in incentives and the prospect of a further downturn in sales.
The subsidies, which apply to vehicles sold in 2017, will be used in part to improve cash flow and pay down debt, the company said Monday. The funds are nearly on par with BYD's roughly 1.5 billion yuan in net profit earned during the January-September 2019 period.
China in July slashed the subsidies designed to encourage nationwide sales of new-energy vehicles -- a catch-all term for EVs and plug-in hybrids -- by roughly half. This reduction dealt a heavy blow to electric vehicle makers, especially BYD. Its net profit plunged by 89% for the July-September quarter, upending the company's finances.
BYD's sales of new-energy vehicles have dropped for seven straight months through January compared with year-earlier figures. In January alone, unit sales plunged by 75%.
Sales are due to slump further amid the outbreak of the new coronavirus. In response to market conditions, the Chinese government in January pledged to maintain the current level of new-energy vehicle subsidies, at least for this year. Authorities still plan to abolish the program eventually.