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Electric cars in China

China's BYD halts work at electric bus factory

Shutdown at country's largest EV maker follows big subsidy rollback

The temporary shutdown of a BYD electric bus factory could herald hard times ahead for China's EV industry.

GUANGZHOU -- BYD, China's largest electric-vehicle maker, temporarily halted operations at its EV bus factory in Guangzhou, Guangdong province, the latest knock-on effect that began when the government earlier this year decreased electric vehicle subsidies by up to 50%.

BYD and the Guangzhou Automobile Group jointly invested in the factory, which will be stopped through May. In company parlance, the factory "has entered the off-season."

Production-related workers as well as employees at the quality unit of Guangzhou GAC BYD New Energy Bus will be put on leave for the duration of the shutdown, which "will not impact sales or business in 2019 as a whole," BYD said.

Beijing has driven market growth in the sector with heavy subsidies meant to encourage the development of new energy vehicles such as EVs. However the government started gradually decreasing the subsidies in 2017 and plans to terminate the program by next year.

Some executives in the Chinese auto industry expect "the market for new energy vehicles to shrink nearly 40%," one said.

If the government completely phases out the subsidies as planned in 2020, Chinese EV makers will be put on a level playing field with their Western and Japanese rivals, whose brands make up a minority of the Chinese market.

The shutdown at China's largest EV manufacturer suggests that other less competitive players could fall by the wayside.

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