China’s New Energy Vehicle ‘Star’ Company Goes Bankrupt Despite Hefty Subsidies

An electric concept car from Chinese vehicle manufacturer BYD on display at the Beijing Auto Show on April 26, 2018. Wang Zhao/AFP via Getty Images

Yangtze River Automobile Group, a Chinese electric vehicle (EV) manufacturer, recently declared bankruptcy. The company was once called Asia’s largest new energy vehicle manufacturer, and had acquired land in several big cities to build its manufacturing bases.

However, it went bankrupt at a time when the EV industry is thriving. Insiders told Chinese media that the company was allegedly founded to obtain government subsidies, and its over-reliance on subsidies eventually led to a broken funding chain.

Huge Investments, Quick Expansion, Little Success

Yangtze River Automobile (hereafter referred to as Yangtze Auto) has been operating at a loss since its establishment. When it formally declared bankruptcy in July, the company owed more than 50 million yuan (about $7.3 million) in wages to its employees, its external debts were as high as 3 billion yuan (about $437 million).