State-owned automaker BAIC's new-energy vehicle unit expects reduced sales of its cheaper electric vehicles as a government phase-out of subsidies squeezes margins for lower-end electric car companies.

The cheaper EC series accounted for 57.3% of BJEV’s total vehicle sales in 2018, according to the China Passenger Car Association. But BJEV expects EC vehicles to make up only 20% of its sales this year, vice-general manager Li Xiuyi said Tuesday.

BJEV is China’s second-largest manufacturer of new-energy vehicles, a term the Chinese government uses to describe cars using pure electricity, hybrid and hydrogen technologies.

The company’s announcement came after China reduced subsidies for some electric-vehicle makers, while raising requirements for companies hoping to receive the handouts, in an effort to boost competitiveness in the industry.

Related: China’s Cut to Electric-Car Subsidies Is the Biggest in Five Years