BEIJING, March 28 (Reuters) - Chinese automaker BYD Co Ltd, backed by Warren Buffett’s Berkshire Hathaway Inc, forecast a 24-35 percent year-on-year fall in net profit for the first quarter, as the government reins in subsidy support for green energy cars.
The Shenzhen-based manufacturer , which has invested heavily in making battery electric and plug-in hybrid vehicles, estimated net profit for Q1 2017 at between 550 million yuan ($80 million) and 650 billion yuan.
BYD reported annual net profit rose 78.9 percent to 5.1 billion in 2016, roughly in-line with preliminary figures issued last month.
China’s central government aggressively promotes green energy vehicles, including spending billions of dollars in subsidies, to combat urban pollution and encourage technology innovation.
But the country imposed stricter requirements on electric carmakers after a subsidy cheating scandal last year. It also cut subsidies 20 percent this year to promote competition.
“Changes to new energy vehicle (NEV) subsidy policy will affect the first quarter, the NEV industry will have a short-term adjustment,” the automaker said in its Shenzhen exchange filing.
“The group’s NEV business will come under a certain pressure, and NEV sales and profits are expected to decline.”
BYD reported slower earnings in the third quarter last year after four consecutive quarters of triple-digit growth as NEV sales soared.
Earnings growth is expected to decline further in 2017 with analysts polled by Reuters predicting an 8 percent rise in net profit for the year.
Sales of electric and plug-in hybrid cars fell 30.5 percent in the first two months of 2017 as consumers wait for local governments to announce their new subsidy policies for the year, which supplement those given by central authorities.
$1 = 6.8840 Chinese yuan renminbi Reporting by Jake Spring; Editing by Randy Fabi and Mark Potter