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BYD Stock Surges Despite New EU Tariffs

Daniel Kim Views  

AP Newsis

NH Investment & Securities stated on the 14th that the stock price of BYD has surged despite Europe imposing additional tariffs on Chinese electric vehicles (EVs). The firm analyzed that the impact of these measures on earnings is projected to be limited, and attention should be paid to the company’s competitiveness.

The European Union (EU) announced on the 12th that it will increase tariffs on Chinese EVs from the existing 10% to an additional 17.4~38.1% points (p) per company. This will be applied from July 4 if negotiations with the Chinese authorities do not proceed well, and it will be implemented for five years if approved by the 27 EU countries.

Despite news of a European tariff increase, BYD’s stock price rose 5.8% in Hong Kong and 4.3% in China.

NH Investment & Securities Analyst Cho Cheol Gun explained, “The rise in stock prices reflects expectations that BYD’s market share in Europe will expand as the additional tariff increase imposed on BYD is 17.4%p, lower than the top two Chinese companies who exported cars to Europe last year, Shanghai Automobile (38.1%p) and Geely Automobile (20%p).

He further predicted, “An additional tariff of 21%p is also expected to be imposed on Chinese-made Teslas. BYD is pushing for the construction of a factory in Hungary and plans to build a second factory in Europe, so the impact of European regulations on BYD’s sales volume will be limited.”

Cho stated, “The issue of European tariffs on China has been known for a long time, and related concerns have already been fully reflected in the stock price. The announcement of a more favorable tariff imposition compared to expectations has worked as a positive factor. We recommend focusing on the competitiveness and growth potential that BYD has secured in the EV market rather than on external regulatory noise.”

He added, “BYD’s substantial research and development (R&D) investment is leading to enhanced product competitiveness, and the cost-saving effect through vertical integration is appearing faster than expected. In May, they launched the plugin hybrid model Qin, which is of the highest global standard. In June, they were selected as an L3 autonomous driving pilot operator by the Chinese authorities, thus narrowing the technology gap with leading companies.”

Daniel Kim
content@viewusglobal.com

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