In response to a Chinese car company possibly encroaching on American firms, someone said:
"The problem is that the US has to make something. Chinese model subsidizes Chinese auto industry and other manufacturing beyond the scope of what western countries do (and we absolutely subsidize them). To hit the Chinese price point would require paying below subsistence wages and obtaining inputs at a price that can match what is essentially a vertically integrated Chinese supply chain. It won't happen. So yeah, Chinese autos would destroy US auto production regardless what management or design choices."
Something doesn't seem completely right about this. They are basically saying that the CCP subsidizes a major percentage of every car? Is that true or possible?
Your instinct is right — the claim mixes some truth with some misdirection, and the "subsidies are doing the heavy lifting" framing is probably the weakest part.
A February 2026 Rhodium Group analysis estimated BYD has about a $4,700 per-vehicle cost advantage over Tesla, with Geely around $2,700 and Leapmotor around $2,000. Of that gap, state subsidies account for just 5% of BYD's $4,700 per-vehicle cost gap with Tesla — scale, cheaper talent, and in-house manufacturing make up the rest. Direct grants work out to roughly $292 per vehicle for BYD and about $64 for Geely when spread across their volumes.
CSIS (Scott Kennedy's work, which is the source most often cited) found that average state support per Chinese EV fell from $13,860 in 2018 to just under $4,800 in 2023 — actually less than the $7,500 credit U.S. buyers get under the Inflation Reduction Act. The cumulative number is big — China's EV industry received at least $231 billion in government subsidies and aid from 2009 through 2023 — but spread across hundreds of millions of sales and 15 years of industry build-out, it isn't "subsidizing a major percentage of every car."
So no — the CCP is not writing a check that covers anything close to a majority of each vehicle's cost. That part of the comment is overstated.
The real Chinese advantage is structural, not a subsidy line item. Per Rhodium, the two largest drivers are vertical integration and significantly lower overheads, which together account for at least three-quarters of the cost advantage. BYD makes its own batteries, chips, motors, glass, even its own ships to move cars. Fifteen years of industrial policy (which includes but isn't limited to subsidies — it's also charging infrastructure, permissive regulation, guaranteed procurement, and coordinated supply-chain investment) built that ecosystem. Tariffs and countervailing duties can't un-build it.
"Below subsistence wages" is hyperbole. BYD paid an average of about 147,000 yuan ($21,400) per employee in total compensation in 2025 — low by U.S. standards, but the cost of living in Shenzhen or the lower-tier cities where most BYD factories operate is a fraction of what workers face in Fremont, California, or Casa Grande, Arizona. Line workers at companies like BYD have historically been in the $4–9/hour range versus roughly $29/hour for UAW workers. Big gap, yes. Below subsistence in local terms, no — though there are legitimate reports of labor disputes and very thin margins above minimum wage.
A more defensible version of the comment would be:
"The U.S. can't close the gap with tariffs or wage cuts alone, because the advantage is an entire vertically integrated ecosystem built over 15 years of coordinated industrial policy — and we didn't build one."
That's actually a worse problem than "they subsidize a lot," because you can match a subsidy with a subsidy. You can't conjure a CATL/BYD-depth battery supply chain in three years no matter how much you spend.
The commenter landed on something real but attributed it to the wrong cause — which matters for policy, because if you think it's 80% subsidies you reach for tariffs, and if you think it's 80% structural you reach for much more ambitious (and patient) industrial strategy.
So basically, BYD wins because of long term planning and deep vertical integration. And Ford loses because of the lack of vertical integration and massive overhead in manufacturing and R&D?
That's the gist, but I'd tighten it in a couple of places because the "Ford loses" framing can mislead you about what's actually going on.
Yes — vertical integration and long-term planning are the big ones, but it's worth naming the specific mechanisms because they compound:
- In-house everything. BYD makes its own batteries (it started as a battery company before making cars), its own chips, its own motors, even its own car carriers. That means fewer supplier margins stacking up, and faster iteration when one component needs to change.
- Scale amortizes R&D. Per the Rhodium analysis, BYD actually spends more absolute R&D than Tesla, but across many more vehicles, so per-car R&D is lower.
- Cheaper engineering talent — not just cheaper line workers. A competent mechanical or software engineer in Shenzhen is a fraction of the cost of the Bay Area, and there are a lot of them.
- Extended supplier payment terms. BYD famously stretches payables way out, which is effectively free working capital.
- Home market depth. A home market of 25M+ vehicles/year that lets you experiment at scale before exporting.
And the 15-year industrial policy backdrop — charging infrastructure, license-plate preferences for EVs, dual-credit mandates forcing automakers to electrify, guaranteed government procurement — created a domestic demand floor while the industry matured. Subsidies were part of that, but the regulatory scaffolding may have mattered more than the checks.
Here's where I'd push back. Ford isn't losing to BYD in any market they currently compete in — BYD doesn't sell passenger cars in the U.S., and the 100%+ tariffs make sure they won't soon. Ford's problems are mostly self-inflicted and structural to the U.S. industry:
- They bet on huge ICE trucks and SUVs because that's where the margins are, and they're still cash cows.
- Their EV division (Model e) is bleeding money — billions in losses — because they're sub-scale and haven't vertically integrated batteries meaningfully.
- UAW labor costs are real, but they're maybe 10–15% of a vehicle's cost, not the whole story. Germany has higher auto labor costs than the U.S. and still exports premium cars profitably.
- Legacy dealer networks, legacy supplier relationships, legacy platform engineering — all of which are hard to unwind.
The more accurate framing: Ford is losing to its own past. It optimized for a world where ICE trucks subsidized everything else and where the supply chain was a solved problem you outsourced to Tier 1s. BYD optimized for a world where the car is a battery with wheels and software, and where owning the stack is the point. If BYD didn't exist, Ford would still be in trouble on EVs — they'd just be losing to Tesla and Hyundai/Kia instead.
BYD's win is roughly what you said. Ford's loss is a separate story that mostly predates BYD and has more to do with incumbent inertia than Chinese competition. The scary thing for Detroit isn't that BYD is cheating — it's that BYD figured out a better operating model, and the tariffs are buying time rather than solving the underlying problem.
- Rhodium Group, Why Are Chinese EVs So Cheap? (February 2026)
- CSIS / Scott Kennedy, The Chinese EV Dilemma: Subsidized Yet Striking
- European Commission anti-subsidy investigation findings
- Bloomberg reporting on cumulative Chinese EV industry support (~$231B, 2009–2023)