BYD, China's largest electric-vehicle maker, has temporarily halted operations at its EV bus factory in Guangzhou, Guangdong province. This seems to be the effect of the Chinese government decreasing subsidies for electrical subsidies which began earlier this year.
BYD and the Guangzhou Automobile Group jointly invested in the factory, which will be stopped through May. 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.
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 percent”. 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 counterparts, whose brands make up only a minority in the Chinese market.
The shutdown at China's largest EV manufacturer suggests that other less competitive players could fall by the wayside.