Losing money on the cars they produce and sell isn’t a radically new concept for automotive manufacturers. But in China, that economic conundrum has risen to something of an art form. A recent report in the New York Times takes a broad look at how builders of electric cars in China are able to stay in business despite losing money. The main reason? Robust government subsidies that allow the manufacturers to not only survive, but thrive.
One new development—one that has likely in part prompted the Times’ story—is an investigation by the European Union into the way that electric car manufacturers in China have received such subsidies, a step that could lead Europe to impose tariffs on the EVs that the country exports.
Times reporter Keith Bradsher users Chinese company Nio as one focus of his story, explaining that Neo employs 11,000 people in research and development, but sells only 8,000 cars per month. Nio, he writes, “lost $835 million from April through June, or $35,000 for each car it sold.” But Nio soldiers on, thanks to funds injected by government and state-controlled banks.
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