What's going on?

The Chinese government is reportedly set to roll out measures to boost spending on the country�s car industry by $30 billion this year.

What does this mean?

Car sales in China � the world�s biggest auto market � have tailed off in the last few months, given that it�s both difficult and irrelevant to buy a car when you�re trapped in lockdown. In fact, there wasn�t a single person among Shanghai�s 25 million-strong population who bought one in April. And with the government now withdrawing subsidies designed to encourage drivers to buy EVs, demand could slide even more. But while the authorities taketh with one hand, they giveth with the other: state TV reported this week that the government is thinking about extending tax exemptions for EV buyers. That bodes well for the likes of Li Auto, Xpeng, Nio, and BYD, all of which saw their shares rise after the news.

Why should I care?

Zooming in: It�s BMW�s time to shine.
BMW will be pleased to hear it: the German carmaker � whose Chinese sales fell in the first quarter from the same time in 2021 � announced on Thursday that production is now underway at its new $2.2 billion plant, which it�s hoping will increase its annual EV output in China by nearly 20% (tweet this). The plant is BMW�s third assembly facility in the country, and it�s been designed to produce only enough EVs to meet demand, rather than the mass production lines of old.

The bigger picture: Self-inflicted wounds.
China�s lockdowns might�ve done a number on its economy, but there could be an even bigger risk to the country in the form of its languishing property market. The sector represents around 20% of the country�s output, and it�s been left in tatters by the government�s tough stance on the sector. In fact, Goldman Sachs is expecting the sector to drag economic growth down by 1.4 percentage points this year.