Chinese EV major BYD’s (OTC:BYDDF) (HK:1211) global sales juggernaut is running into some speed bumps along the way. According to the Wall Street Journal, the company is facing weak demand, pricing challenges, and quality concerns in its overseas markets.
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BYD has swiftly risen to the top position in the Chinese EV market, but is now experiencing a buildup of vehicles in European warehouses. Last year, BYD sold nearly 16,000 vehicles in Europe compared to over 240,000 vehicles in China. Recently, a global slowdown in sales is impacting the company’s internal growth targets.
Quality Concerns Persist In BYD Vehicles
In addition to this, quality concerns have persisted. Earlier this year, a BYD bus catching fire led to a recall of about 2,000 buses in London. Moreover, defective BYD vehicles arrived in markets in Japan, Europe, and Thailand. While quality adjustments in newly arrived vehicles are standard in the auto industry, with increasing scale, the task can become challenging.
According to the WSJ, a focus on sales targets has also resulted in internal strife at the company. Notably, BYD’s overseas expansion coincides with weaker overall demand trends, adding pressure on the company to remain competitive on pricing.
Global Expansion Plans
BYD is strategically charting an ambitious course for expansion, aiming to elevate its car carrier fleet from one to eight in the upcoming two years. It is also setting up a $680 million plant in Brazil and rapidly expanding its footprint in Japan. In contrast, Japanese automotive majors Nissan (OTC:NSANF) and Honda (NYSE:HMC) are looking to lower their production capacity in China due to intense competition.
Importantly, the scale of BYD’s global ambitions is a multi-year play. Consequently, the EV major may need to focus on shortening its learning curve to keep its growth engine moving. Currently, over 10,000 BYD vehicles have accumulated in European warehouses.
What Is The Price Prediction for BYD?
Shares of the company have tanked by nearly 23% over the past six months amid a freefall in China’s financial markets. Overall, the Street has a Strong Buy consensus rating on BYD, and the average BYDDF price target of $37.93 points to a massive 49.9% potential upside in the stock.
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