On July 26 the Shanghai government decided to cut half of the subsidies given to consumers of BYD Co Ltd, a leading new-energy vehicle (NEV) maker in China.

In May, BYD consumers were told they could no longer enjoy the previous 20,000 yuan (US$2,998) subsidy given by the Shanghai local government for NEV.

With the new reduction, the subsidies given for BYD's NEV will be reduced to just 5,000 yuan (US$749) from 40,000 yuan (US$5995) in 2015.

Shanghai adjusted its yearly subsidy program for NEV in April, with the scope and depth of the policy narrowing. According to the latest program, the subsidies will be halved when a company's NEV has sold 40,000 vehicles and the subsidies will be cancelled when total sales exceeds 60,000.

In 2016, BYD had suffered plummeting sales in the Shanghai market due to the government's subsidy reduction. More and more consumers prefer to choose other brands' NEV, such as FAW or SAIC, thanks to their favorable price after subsidies.

In order to make up for the government's subsidies reduction, BYD vowed in June to discount 14,000 yuan (US$2,099) from the price of its NEV. The company is also debating whether or not it should make further reductions.

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