Reductions in subsidies for new energy vehicles, or NEVs, could reduce BYD Co. Ltd.'s quarterly profit by up to 90%, Reuters reported, citing a company statement.
The China-based automobile manufacturer expects its first quarter net profit to fall 75.2% to 91.8% year over year due to the cuts. For the three months ending March 31, BYD's net profit is projected to be 50 million Chinese yuan to 150 million yuan, down from 605.8 million yuan in the year-ago period.
BYD's shares fell 11.528% on the Hong Kong Stock Exchange to HK$62.550 as of 2:26 p.m. local time.
The country's finance ministry slashed subsidies for lower-range NEV cars and some buses in February, while increasing outlays for higher-performance vehicles. According to BYD, the quota system based on NEV output and performance planned to take effect in 2019 will support larger players while "eliminating weaker players in the industry."
Industry executives from around the world have called on Beijing to continue support for the Chinese NEV market where auto sales growth is shrinking, Reuters said.
As of March 27, US$1 was equivalent to 6.28 Chinese yuan and HK$7.85.