In interesting news on Hong Kong stocks, automaker BYD Co. Limited (HK:1211) has slashed the price of one of its electric vehicles (EVs) once again due to the increasing pressure from the ongoing price war. BYD has set the price on its renewed Yuan Plus crossover, known as the Atto 3 in international markets, at RMB119,800. The price is 11.8% lower than the already discounted price of its previous version. 1211 shares are down 1.1% in mid-day trading as of the time of writing.
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EV Price Wars and Intense Competition
China, considered the world’s largest and most competitive EV market, is seeing continued price discounting policies from automakers. Both domestic and international EV players such as Geely Automobiles (HK:0175) and Tesla (NASDAQ:TSLA) are vying to gain a bigger share of China’s EV market by offering discounts and incentives to customers. At the same time, Chinese authorities are introducing purchase tax exemption on EVs to boost the adoption of new energy vehicles in the country.
Amid intense competition in the Chinese EV space, BYD is seeking growth in international markets. As per the China Association of Automobile Manufacturers, BYD sold 412,202 Yuan Plus EVs in 2023, of which 100,020 were exported, accounting for 42% of the company’s total exports for the year. BYD makes higher profit margins from export sales and is extending its price war into the international markets. For instance, BYD’s Atto 3 base version is sold at AU$48,011 in Australia, 85% costlier than in China. Recently, BYD announced that is introducing new EVs in Japan and expanding its dealerships to boost sales.
Also, BYD launched its high-end electric sports utility car, the Yangwang U9 at $230,000 to compete with Toyota (NYSE:TM) and Volkswagen (DE:VOW) in the premium auto market. BYD is also launching a slew of other plug-in hybrid autos to compete with international players as the adoption of fully electric cars seems to be cooling down.
Is BYD Stock Good to Buy?
Yesterday, Bernstein analyst Toni Sacconaghi reiterated a Buy rating on BYD shares with a price target of HK$334 (73.4% upside). The analyst believes that BYD will be able to thrive in the competitive EV landscape both in China and abroad thanks to its “unparalleled cost structure and product innovation ability, that stems from its high degree of vertical integration.”
Importantly, Sacconaghi forecasts China’s EV market demand to grow by 25% year-over-year despite the rising competition and raging price war.
Three other analysts are also bullish on BYD stock and have awarded it a Strong Buy consensus rating on TipRanks. The BYD Co. Limited share price forecast of HK$289.98 implies 50.6% upside potential from current levels.
