Chinese Local Governments' Subsidized Investments Backfire: Neta Auto Loses 84.1 Billion NTD in 3 Years
Chinese EV maker Neta Auto, heavily subsidized by local governments seeking economic achievements, has suffered a massive net loss of 18.3 billion RMB over three years, leading to bankruptcy restructuring. This highlights the severe consequences of blind local investments and market involution.
📋 Article Processing Timeline
- 📰 Published: April 23, 2026 at 18:22
- 🔍 Collected: April 23, 2026 at 18:31 (9 min after Published)
- 🤖 AI Analyzed: April 23, 2026 at 18:41 (9 min after Collected)
Central News Agency
(CNA Reporter Li Yameng, Shanghai, 23rd) Chinese local governments have been seeking economic achievements through subsidized investment attraction. Neta Auto once set up factories in multiple locations using subsidy incentives, but ultimately failed to survive market tests, suffering a net loss of 18.3 billion RMB (approx. 84.1 billion NTD) over three years, resulting in a lose-lose-lose situation for the government, enterprise, and investors.
CCTV's program "Focus Report" revealed the problem of "involution" (competing investments with declining returns) in local government investment attraction, singling out Neta Auto's parent company, Hozon New Energy, as a "typical negative example".
Neta Auto's smart factory in Yichun, Jiangxi, was once seen as a highlight of investment attraction, but now it stands completely empty. Yichun historically had no automotive manufacturing foundation or location advantage. To attract Neta Auto to build a factory there, the Yichun Economic and Technological Development Zone invested up to 5 billion RMB; land and factory buildings were also resolved by establishing a company invested in by local state-owned enterprises.
To secure Neta Auto, the local government provided measures such as investment equity, proxy construction of factories, and a 10-year rent exemption. For every car sold in Yichun, the government provided a reward of 20,000 RMB. To achieve investment attraction targets, Yichun offered preferential policies disproportionate to the risks; it is widely believed locally that without special policies, it is hard to attract large enterprises.
Liu Yang, head of the Investment Promotion Service Bureau of Yichun Economic Development Zone, stated bluntly that at the time, the state was encouraging the new energy vehicle industry, the automotive supply chain was complete, and many emerging car brands were doing well in Anhui or developed coastal areas. "We felt we had to bring in a capable enterprise with market prospects to drive local industrial development."
The factory in Yichun, Jiangxi, was actually just one of many bases for Hozon New Energy. Lured by other local governments, Hozon New Energy also has production bases in Tongxiang, Zhejiang, and Nanning, Guangxi. In Nanning, for example, the land and factory buildings for the construction plan were also funded and invested by government-owned enterprises.
Market competition forced the ignored investment risks to surface. Data shows that Hozon New Energy accumulated a net loss of 18.3 billion RMB from 2021 to 2023, losing an average of over 80,000 RMB on every car sold. Starting in 2024, Neta Auto's production lines in three locations halted; in the second half of 2025, Hozon New Energy was filed for bankruptcy restructuring by creditors.
Local governments overly concentrated on single projects, leading to repetitive construction and industrial involution. The price wars initiated by many new energy vehicle companies in 2023 and 2024 are intrinsically linked to local blind investments in new energy vehicles. During the financing processes of bankrupt and restructuring new energy vehicle companies like HiPhi, Byton, and Bordrin, there were investments from local state-owned capital.
Hu Zhaohui, Deputy Director-General of the Department of Comprehensive System Reform of China's National Development and Reform Commission, stated that some localities, for the sake of political achievements, seek excessive scale and speed in project construction, even ignoring their fiscal bearing capacity, and engage in massive subsidy competitions. This plunges investment attraction into involuted vicious competition, exacerbates market fragmentation and industrial homogenization, and undermines the construction of a unified national market.
Hu noted that competing with subsidies distorts market mechanisms. Backed by government investment, enterprises are not held accountable for their investment behaviors. For the industry, these actions breed a massive amount of low-level repetitive construction, exacerbate the risk of overcapacity and disorderly low-price competition, and weaken the long-term development foundation of the industry. These behaviors are contrary to the requirements of building a unified national market and must be regulated and curbed. (Editor: Yang Shengru) 1150423
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(CNA Reporter Li Yameng, Shanghai, 23rd) Chinese local governments have been seeking economic achievements through subsidized investment attraction. Neta Auto once set up factories in multiple locations using subsidy incentives, but ultimately failed to survive market tests, suffering a net loss of 18.3 billion RMB (approx. 84.1 billion NTD) over three years, resulting in a lose-lose-lose situation for the government, enterprise, and investors.
CCTV's program "Focus Report" revealed the problem of "involution" (competing investments with declining returns) in local government investment attraction, singling out Neta Auto's parent company, Hozon New Energy, as a "typical negative example".
Neta Auto's smart factory in Yichun, Jiangxi, was once seen as a highlight of investment attraction, but now it stands completely empty. Yichun historically had no automotive manufacturing foundation or location advantage. To attract Neta Auto to build a factory there, the Yichun Economic and Technological Development Zone invested up to 5 billion RMB; land and factory buildings were also resolved by establishing a company invested in by local state-owned enterprises.
To secure Neta Auto, the local government provided measures such as investment equity, proxy construction of factories, and a 10-year rent exemption. For every car sold in Yichun, the government provided a reward of 20,000 RMB. To achieve investment attraction targets, Yichun offered preferential policies disproportionate to the risks; it is widely believed locally that without special policies, it is hard to attract large enterprises.
Liu Yang, head of the Investment Promotion Service Bureau of Yichun Economic Development Zone, stated bluntly that at the time, the state was encouraging the new energy vehicle industry, the automotive supply chain was complete, and many emerging car brands were doing well in Anhui or developed coastal areas. "We felt we had to bring in a capable enterprise with market prospects to drive local industrial development."
The factory in Yichun, Jiangxi, was actually just one of many bases for Hozon New Energy. Lured by other local governments, Hozon New Energy also has production bases in Tongxiang, Zhejiang, and Nanning, Guangxi. In Nanning, for example, the land and factory buildings for the construction plan were also funded and invested by government-owned enterprises.
Market competition forced the ignored investment risks to surface. Data shows that Hozon New Energy accumulated a net loss of 18.3 billion RMB from 2021 to 2023, losing an average of over 80,000 RMB on every car sold. Starting in 2024, Neta Auto's production lines in three locations halted; in the second half of 2025, Hozon New Energy was filed for bankruptcy restructuring by creditors.
Local governments overly concentrated on single projects, leading to repetitive construction and industrial involution. The price wars initiated by many new energy vehicle companies in 2023 and 2024 are intrinsically linked to local blind investments in new energy vehicles. During the financing processes of bankrupt and restructuring new energy vehicle companies like HiPhi, Byton, and Bordrin, there were investments from local state-owned capital.
Hu Zhaohui, Deputy Director-General of the Department of Comprehensive System Reform of China's National Development and Reform Commission, stated that some localities, for the sake of political achievements, seek excessive scale and speed in project construction, even ignoring their fiscal bearing capacity, and engage in massive subsidy competitions. This plunges investment attraction into involuted vicious competition, exacerbates market fragmentation and industrial homogenization, and undermines the construction of a unified national market.
Hu noted that competing with subsidies distorts market mechanisms. Backed by government investment, enterprises are not held accountable for their investment behaviors. For the industry, these actions breed a massive amount of low-level repetitive construction, exacerbate the risk of overcapacity and disorderly low-price competition, and weaken the long-term development foundation of the industry. These behaviors are contrary to the requirements of building a unified national market and must be regulated and curbed. (Editor: Yang Shengru) 1150423
Stand with the facts, every sponsorship from you is the power to guard press freedom.
Download CNA's "First-hand News" APP to instantly grasp the latest news.
The text, images, and audio-visuals on this website may not be reproduced, publicly broadcast, publicly transmitted, or utilized without authorization.