The Impact of Government Subsidies on Financial Performance of BYD

This study examines the impact of government subsidies on BYD's development in the new energy vehicle industry. Based on the Party's green development philosophy and the policy framework for the new energy vehicle sector, this paper analyzes BYD's subsidy and financial performance from 2015 to 2024. The research reveals that BYD's government subsidies first decreased before rebounding, reaching 10.66 billion yuan in 2024 with a 130.7% growth rate. Government subsidies positively influence operational capabilities, while inventory and total asset turnover ratios show increasingly significant impacts from subsidies. In terms of profitability, pre-2022 subsidies showed weak correlation with return on equity (ROE), but later increased synchronously with subsidy surges. Meanwhile, BYD faces challenges including subsidy reduction, R&D challenges, and infrastructure constraints. Therefore, strategies such as increasing R&D investment and optimizing cost management are proposed. Through the implementation of corresponding measures, BYD Company has effectively mitigated the constraints of reduced government subsidies, enabling it to pursue autonomous development to the greatest extent possible. Concurrently, during periods of robust government support, the company has leveraged these subsidies to achieve enhanced profitability.