Fiscal Subsidies and Sustainable Growth of New Energy Vehicle Firms: Evidence from R&D Mediation in China

Abstract

Against the background of China's ambitious green transition and the gradual adjustment of industrial subsidy policies, this study comprehensively examines how fiscal subsidies affect the financial sustainable growth of listed new energy vehicle (NEV) firms. Using extensive panel data of Chinese A-share listed new energy vehicle companies spanning from 2014 to 2023, this paper constructs a robust fixed-effects model to empirically test the direct effect of fiscal subsidies on the financial sustainable growth rate. Furthermore, it explores the critical mediating role of research and development (R&D) investment and the heterogeneous effects across different geographical regions and corporate ownership types. The empirical results demonstrate that fiscal subsidies have a highly significant positive impact on the financial sustainable growth of these firms, and this core conclusion remains robust after replacing explained variables and incorporating additional control variables. Mechanism analysis indicates that R&D investment serves as an indispensable transmission channel through which fiscal subsidies effectively enhance firms' endogenous innovation and long-term growth capacity. Heterogeneity analysis reveals that the positive effect of subsidies is markedly more pronounced in economically developed eastern regions and among non-state-owned enterprises, whereas the effect is comparatively weaker or statistically insignificant in central and western regions as well as within state-owned enterprises. The findings strongly suggest that future subsidy policies should strategically shift from broad-based financial support to highly targeted, performance-oriented mechanisms. Simultaneously, NEV firms must proactively improve their subsidy utilization efficiency and systematically reduce excessive reliance on external policy support to ensure long-term market competitiveness.