China’s biggest electric vehicle maker BYD may finally live up to that label this year.
The group rolled out the world’s first mass-produced (paywall) hybrid a decade ago, but through last year, it still sold more fossil-fuel vehicles annually than new energy vehicles, which includes pure electric vehicles and plug-in hybrids.
That’s changing as its NEV sales have caught up fiercely in recent years, still showing strength even as China’s fossil-fuel auto market last year posted a sales decline for the first time since 1990 amid an economic slowdown. Last year NEV sales in China grew by more than 60%.
BYD sold close to 250,000 of them in 2018, double its sales in the category in the previous year, and only 25,000 units short of its fossil-fuel vehicle sales in 2018—the closest gap so far between the two groups.
Stepping into 2019, it’s clear that this year its NEV sales will be decisively ahead. The group’s monthly NEV sales in January and February surpassed fossil-fuel car sales, according to BYD’s sales reports for those months, continuing a trend that surfaced last July.
BYD didn’t get to where it is today, however, without generous subsidies from the Chinese government, which began giving monetary incentives a decade ago to help the industry prosper.
BYD alone received over $1 billion in subsidies from the central government toward its NEVs sales in 2016, a Quartz calculation found. That’s more than its net profit—5.1 billion yuan ($750 million)— that year.
China began scaling back the subsidies in 2017—they’ll go away entirely from 2020—and BYD’s profit has suffered since then. Net profit for 2018 declined to $413 million, a drop of more than 31% compared with the previous year, according to full-year earnings numbers yesterday (pdf, p. 2). The group is predicting a rosier first quarter, even though both NEV and fossil-fuel car sales declined in January and February compared with preceding months.
Correction, March 28: This story earlier said that the January and February figures were the first ones in which monthly NEV sales overtook fossil-fuel ones. BYD’s monthly NEV sales have been ahead of the fossil-fuel ones since July.
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