The Impact of Government Subsidy Phase-Out Policy on Innovation Performance in China's New Energy Vehicle Industry

This study investigates the impact of phasing out China's government subsidy policy on innovation performance in the new energy vehicle (NEV) industry. Utilizing a panel dataset of 169 publicly listed companies from 2011 to 2022, the study employs a Difference-in-Differences (DID) methodology to analyze the effects of subsidy phase-out on corporate innovation performance, measured by granted invention patents. The findings reveal that the phase-out of the subsidy policy positively influences innovation performance by prompting firms to increase R&D investments. However, the impact varies by ownership structure and regional development levels, with state-owned enterprises (SOEs) and firms in less-developed regions experiencing stronger effects. These findings support the rationale for phasing out subsidies at certain stages of industry development to minimize over-reliance on government support. The study contributes to the literature on industrial policy and innovation and offers practical insights for policymakers on designing and implementing subsidy policies for emerging industries.