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Photographer: Qilai Shen/Bloomberg Photographer: Qilai Shen/Bloomberg

Shares of Chinese electric-car makers fell in the wake of a Bloomberg News report that said regulators may cut subsidies further on the embattled industry.

BYD Co., China’s biggest maker of new energy vehicles, slid 2.8% in Hong Kong. BAIC BluePark New Energy Technology Co., the country’s biggest maker of pure electric cars, retreated 2.9% in Shanghai, while Contemporary Amperex Technology Co. Ltd., the world’s biggest car-battery maker, dropped 2.5%. Hong Kong’s Hang Seng Index fell 2.6% and the Shanghai Composite Index fell 1.8%, their biggest losses in three and four months, respectively.

China will gauge demand for EVs before making a decision on whether to cut subsidies for the automobiles again, Bloomberg reported Friday, citing people familiar with the matter. The government, which began subsidizing EV purchases in 2009 to promote the industry, has been gradually reducing handouts to encourage automakers to compete on their own.

China Is Considering Cutting Electric-Car Subsidies Again

China’s car market is experiencing a prolonged slump that has dragged down the global EV sector as the country accounts for about half of the world’s sales of electrified cars. Still, regulators continue to face pressure to reduce handouts as state support fueled concerns about a bubble in the industry.

The latest funding cut took effect in June, when the government cut subsidies of as much as 50,000 yuan ($7,165) per EV by half. Chinese NEV sales then began falling in July and have been dropping since. China’s top EV makers have slashed earnings outlooks and analysts have recently questioned whether the likes of Shanghai-based NIO Inc., once regarded by many as China’s Tesla Inc., will survive.

China Car Sales Keep Falling as Peak Season Fails to Deliver

Warren Buffett-backed BYD last month reported an 89% decline in third-quarter earnings and warned profit could fall as much as 43% this year. BAIC BluePark also forecast a 2019 loss in its earnings update.

— With assistance by Ying Tian, and Heng Xie

( Updates share moves in second paragraph. )