BYD’s $60-B Wipeout Signals Deeper Turmoil for China EVs

A relentless selloff in BYD Co. shares is laying bare investor anxiety over the profit outlook for China’s electric-vehicle (EV) sector, as cooling demand at home and surging raw material costs trigger a brutal reset of expectations, Charlotte Yang reported for Bloomberg News.

BYD's slump reverberated across EV peers, compounding woes for a stock market already grappling with fresh concerns over taxes and business disruption from artificial intelligence. (Photo: BYD)

BYD’s Hong Kong–listed shares are down this week after disappointing sales data, extending a slide that has wiped out more than $60 billion in market value since May.

The slump reverberated across EV peers, compounding woes for a stock market already grappling with fresh concerns over taxes and business disruption from artificial intelligence.

Traders had already braced for weaker EV growth this year amid lower government subsidies, reflected in a buildup of bearish bets since November.

Still, the pace of demand deterioration has caught many off guard.

Adding to the strain, soaring costs for battery materials and memory chips are likely to squeeze automakers’ margins even further.

“Investor sentiment is extremely negative,” said Xiao Feng, co-head of China industrial research at CLSA in Hong Kong.

“The deeper worry is that we’ll see large-scale earnings downgrades this year, raising doubts about EV makers’ long-term ability to generate profits in China’s domestic market.”

Exports remain a bright spot, but Chinese car manufacturers still rely heavily on the fiercely competitive home market, where consumers remain skittish. Morgan Stanley notes that most local automakers expect first-quarter volumes to drop 30%–40% from the December quarter.