Regional Authorities in China Pressured to Offer Sales Subsidies to Other Domestic Sellers
The governments of Beijing and Shanghai started offering subsidies in recent months for BYD electric cars. Above, the company’s e6 on display. Reuters
Despite being based in one of the world’s biggest and most polluted car markets, Chinese electric-car maker BYD Co. 002594.SZ +1.59% until recently sold few of its hybrid or battery-powered electric cars outside of its home province of Guangdong, thanks to a system of local subsidies.
Those rules are now changing under a new effort by China’s central government to push local authorities to treat equally all Chinese car makers when granting green subsidies. This year for the first time, big cities are relaxing subsidy rules that effectively prevented sales of electric and hybrid cars by local manufacturers that weren’t based in their jurisdictions.
Such restrictions had been a drag on green-car sales in China, particularly for BYD, a midsize manufacturer of cars, buses and batteries. In 2008, BYD became the first Chinese auto maker to produce electric cars, a move that helped attract a $232 million investment from Warren Buffett’s Berkshire Hathaway Inc. BRKB +0.35%
This year “is an inflection point for China’s electric-car industry,” Li Yunfei, BYD’s domestic sales executive, said in an interview. “We expect China’s electric car sales will continue to record strong growth rates in the next few years,” he said, without providing details.
BYD in March said it hoped to sell 20,000 electric vehicles in 2014, a big increase from some 2,000 sold last year. Mr. Li said sales in Beijing and Shanghai, one of the first cities to loosen regulations, have already helped push sales of BYD plug-in hybrid passenger cars to 3,294 in the first four months of this year, with 8,000 more on order. Plug-in hybrids are cars that can run on either gasoline or battery-power.