A Research on the Impact of China’s Subsidy Reduction Policy on Tesla’s Market Performance

Abstract

This study examines how Tesla's success in the Chinese market has been affected by China's new energy vehicle subsidy reduction policy. China's subsidy policy, which has been implemented since 2008, has promoted the production and consumption of new energy vehicles. However, as the industry matures, the government has begun to reduce financial support. The subsidy reduction aims to encourage companies to improve their competitiveness through technological innovation and cost control, rather than relying on policy support. This paper first summarizes the total effect on the new energy vehicle industry of the removal of subsidies through a literature review and then uses Tesla as the research object to evaluate the impact of policy changes on its market performance using time series analysis and multivariate regression models. The study finds that the subsidy reduction has led to a slowdown in Tesla's sales growth and a weakening of the price advantage of high-end models; At the same time, local brands such as BYD have further expanded their market share with their price and localized supply chain advantages. This study provides a reference for new energy vehicle companies to respond to policies and also provides insights for the government to formulate industrial policies that balance market competition and policy support. In addition, by demonstrating the extensive effects of subsidy policies on the structure of market competition, this paper provides theoretical and practical support for promoting the sustainable development of the new energy vehicle industry.