When Warren Buffett invests in a company no one’s heard of in China, people pay attention. Eleven years later, BYD remains unfamiliar to some. It is now the world’s biggest electric vehicle maker. Chinese EV producers including BYD have relied heavily on national subsidies. Beijing will reduce these by up to two-thirds from this year. Phase out will be complete in 2020. That means BYD profits, buoyed by more than $1bn in grants over the past five years, should take a hit.
First-quarter profit was up 632 per cent to $111m over the year. The number of electric cars sold more than doubled. Its share price did little. As government subsidies fall, its shares could too. China’s EV market is crowded, with more than 400 makers. BYD’s battery business, an IPO is due by 2022, should suffer from weak battery prices.