The Impact of the Phase-Out of New Energy Vehicle Subsidies on Corporate Performance: The Case of BYD

Abstract

Generous policies have aided China's new-energy vehicle companies in growing since 2009, but the industry has transitioned from policy driven rivalry to market driven competition as a result of the phase out. The thesis investigates the effects of subsidy withdrawal on financial and non-financial performance using BYD Company Limited as a case study (2017–2024) and provides specific recommendations. Results indicate that although profitability was initially impacted, BYD showed remarkable resilience by offsetting a large portion of the effect through ongoing R&D and cost control. Debt-servicing capacity was momentarily pressured by rapid expansion and active financing, but enhanced product strategy and operational effectiveness converted that strain into stronger internal management. While maintaining a high level of innovation input and erecting barriers based on patents, BYD managed to prevent the accumulation of receivables, improve efficiency and cash flow, and ultimately outperform the industry as a whole. As reliance on fiscal subsidies decreases and a higher-quality, safety-focused workforce boosts competitiveness, deeper, process-integrated environmental management becomes a goal. At the same time, rapid capacity growth led to steep increases in electricity, natural gas, and water use.