"BYD received a total of 37.1 billion yuan in tax rebates over the five-year period, nearly four times the 9.3 billion yuan it received in subsidies. Additionally, BYD has secured long-term bank loans at interest rates between 2.05% and 2.98%, lower than the one-year prime lending rate of 3.35%, according to the company filings.
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The overt subsidies mostly existed in the early part of the development process. It's a playbook that's quite commonly used in East Asian economies. Basically it goes like this:
1. Erected barriers to foreign competition and hand out subsidies to simulate local competition
2. Withdraw subsidies to push industries towards mergers and leave only a few big companies in the industry
3. Remove barriers to foreign competitions (i.e. invite Tesla) to foster innovations
4. Export
This makes it devilishly hard to quantify the amount of subsidies received and it's intentional.
China isn't the first to do this but rather borrowed the playbook from Taiwan, Korea, and Japan, who borrowed it from Germany, who, ironically, was inspired by the idea of industrial policy from Alexander Hamilton (https://www.bloomberg.com/news/audio/2024-03-14/odd-lots-ind...)
Thanks for the information! So, if the subsidies are in the form of tax rebates and subsidized loans, is it safe to say, the full economic benefit of these subsidies as a percentage of vehicle sales revenue is single digits? If so, it seems like there's little reason to doubt that BYD would be immensely successful in the US without tarrifs.
TLDR about $2000 per vehicle in 2024, trending to $0 per vehicle in next 5 years. Meanwhile PRC selling cars abroad for 2x+ domestic (i.e. 10-20k over), aka manifestly not dumping prices. BYD (and a few other PRC NEV makers) are successful because they used subsidies the way it should be used - to commoditize manufacturing to ModelT levels (500usd per unit vs when competition was 2000usd).
"BYD received a total of 37.1 billion yuan in tax rebates over the five-year period, nearly four times the 9.3 billion yuan it received in subsidies. Additionally, BYD has secured long-term bank loans at interest rates between 2.05% and 2.98%, lower than the one-year prime lending rate of 3.35%, according to the company filings. "
The overt subsidies mostly existed in the early part of the development process. It's a playbook that's quite commonly used in East Asian economies. Basically it goes like this:
1. Erected barriers to foreign competition and hand out subsidies to simulate local competition
2. Withdraw subsidies to push industries towards mergers and leave only a few big companies in the industry
3. Remove barriers to foreign competitions (i.e. invite Tesla) to foster innovations
4. Export
This makes it devilishly hard to quantify the amount of subsidies received and it's intentional.
China isn't the first to do this but rather borrowed the playbook from Taiwan, Korea, and Japan, who borrowed it from Germany, who, ironically, was inspired by the idea of industrial policy from Alexander Hamilton (https://www.bloomberg.com/news/audio/2024-03-14/odd-lots-ind...)