BYD Surpasses 1,000 Pre-Orders for Atto 3
Hidden Debt of 63 Trillion Raises Accounting Transparency Concerns
Trust in the Korean Market at Risk
“This is why you can’t trust Chinese products. Are we about to witness another Evergrande Auto nightmare?”
China’s largest electric vehicle (EV) manufacturer, BYD, has begun taking pre-orders for its compact electric SUV, Atto 3. The SUV has achieved unexpected sales success in the Korean market. However, recent controversies over its financial soundness have increased consumer concerns.
A recent analysis suggests that BYD’s debt could be more than ten times the officially announced figures, raising red flags about the company’s credibility.
Hidden Debt of 63 Trillion? BYD Accused of Accounting Manipulation
On January 19, Bloomberg, citing a report from Hong Kong GMT Research, reported that BYD has been delaying payments to its partner companies, artificially reducing the scale of its debt.
According to the report, as of the end of June last year, BYD’s official net debt stood at 27.7 billion yuan (approximately 5.48 trillion won). However, when unpaid amounts are included, the figure rises to 323 billion yuan (approximately 63.95 trillion won), eleven times the official number.
One major issue is BYD’s average payment period of 275 days to suppliers, which is excessively long compared to the 45 to 60 days typical for global automakers.
Tesla has stated that it pays its suppliers within 90 days. As suspicions arise that BYD is misusing supply chain financing to manage its cash flow, industry experts warn that “BYD might follow in the footsteps of Evergrande’s Hengda.”
Furthermore, BYD’s “other unpaid amounts” have surged dramatically over the past three years. This category, which stood at 41.3 billion yuan ($5.7 billion) at the end of 2021, skyrocketed to 165 billion yuan ($22.6 billion) by December 2023.
Aggressive Pricing, Opaque Accounting… BYD’s Unstable Sprint
Despite these concerns, BYD has yet to disclose specifics about its debt. In contrast, China’s Geely Automobile provides detailed records of payment recipients and amounts of its other payables, showcasing a stark difference in accounting transparency.
An industry insider noted, “Korean consumers place great importance on brand trust. If BYD’s financial issues continue to spark controversy, initial expectations could fade rapidly.”
BYD has dominated the global electric vehicle market with its aggressive pricing strategy and cost-effectiveness. However, it remains uncertain whether it can withstand the hidden debt risks.
As BYD makes waves in Korea, the question remains: Can it sustain its growth, or will its unstable accounting structure become its downfall?
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