Chinese electric vehicle giant BYD (BYDDF) said it raised almost $5.6 billion in a share sale on Tuesday, driving investors to offload the stock in Hong Kong as it looks to use the proceeds to fund further expansion and widen its lead over Tesla (TSLA). The Hong Kong-listed shares of BYD (HK:1211) tumbled over 6% for one of its worst selloffs since listing in 2002, with the share placing priced at a discount of about 12% to the average closing price of the last ten days.
BYD to Ramp Overseas Sales and Autonomous Driving
It’s BYD’s largest post-IPO fundraising and signals the increasing ambitions of a company that has fast become China’s largest EV maker. The company previously raised $3.84 billion in 2021 through a similar share placement. BYD said the money raised in the placement would be used to expand overseas and to fund research and development, including in intelligent, or autonomous, driving technology.
The fundraising comes as competition with the likes of TSLA is heating up, with Chinese automakers engaged in a price war that has hurt profitability. However, the race is also for technological dominance as automakers pursue autonomous driving systems. Last month the company, which is backed by Warren Buffett’s Berkshire Hathaway, unveiled a host of smart driving functions through its “God’s Eye” technology. By offering this free across a number of mass market models it appeared BYD had widened its lead over TSLA in the field of intelligent driving. Tesla CEO Elon Musk meanwhile blamed regulatory hurdles for its failure to launch its latest driver-assistance software in China.
BYD Posts Strong Sales Growth
BYD domestic sales though continue to shine. The carmaker sold 322,846 EVs in February, up 7.4% from January and nearly 164% higher than last year. Last year, the Shenzhen-based firm’s total vehicle sales rose more than 41% to more than 4.2 million.
But about 90% of its sales are from its home market, leaving BYD eyeing opportunities in foreign markets, where it is making up ground quickly. Overseas sales jumped 188% in February, the third straight month of record-high international sales.
Meanwhile it comes amid escalating trade tensions as Donald Trump pressed ahead with an additional 10% tariff on China, which responded with 15% tariffs on some U.S. imports. Despite the 9% plunge in the last session, BYDDF has rallied about 28% this year as it steams ahead with its growth ambitions.
Can I Buy BYD Stock in the U.S.?
BYD is traded in the U.S. under the tickers BYDDF and via the ADR of BYD stock (BYDDY). On Wall Street, the consensus rating is a Strong Buy, based on seven Buy ratings from analysts offering 12-month price targets in the last three months. The average BYDDF price target of $58.16 implies about 33% upside, though this could change following the share placement.
