Based on the panel data of 89 auto companies in Shanghai and Shenzhen from 2001 to 2019, this paper found that: R D expenditure is an intermediary factor that financial subsidies have on the return on assets of enterprises. Financial subsidies will encourage corporate R D expenditures, but R D expenditures have a negative impact on the return on assets of auto companies. The heterogeneity analysis results show that the incentive effect of financial subsidies on corporate R D expenditure is no different between new energy vehicle companies and traditional car companies, but the increase in R D expenditures of new energy vehicle companies has a greater inhibitory effect on their return on assets. Environmental regulation will strengthen the effects of the effect. And under the constraints of environmental regulations, the R D incentive effect brought by the subsidy policy to traditional auto companies is higher than that of new energy car companies.