"Electric Vehicle Growth Slows"… China BYD Sees Sharp Increase in Short Selling Balance

Electric Vehicle Market Outlook 'Cloudy' Amid Economic Slowdown in China
BYD Stock Falls 16% Since Mid-November

As the growth of the electric vehicle market slows down, more investors are betting on the decline of BYD, China's largest electric vehicle manufacturer.

On the 3rd (local time), Bloomberg News reported, citing IHS Markit data, that as of the 1st, the short-selling balance ratio of BYD shares in the Hong Kong stock market accounted for 5.5% of the total shares. This is the highest level since September last year.

As a result, BYD's stock price has also struggled. Since mid-November last year, when the short-selling balance ratio began to rise, BYD's stock price has fallen by 16%. This decline is larger than the 12% drop in the stock price of Li Auto, a competitor in the Chinese electric vehicle market. The global industry index fell only 3% during the same period.

The main reason for the increase in short-selling investments in BYD, which surpassed Tesla in the fourth quarter of last year to become the world's number one electric vehicle seller, is the slowdown in the growth of the electric vehicle market. As the Chinese economy slows down, consumers face greater burdens in purchasing relatively expensive electric vehicles.

The outlook for this year is not bright either. Singapore's UOB Bank expects China's electric vehicle sales growth rate to fall to 17% this year, half of what it was a year ago. Bloomberg predicts BYD's electric vehicle sales growth rate will drop from 60% last year to around 24% this year.

However, Chinese electric vehicle manufacturers plan to steadily launch new models this year, which is expected to accelerate competition within the market. According to HSBC Qianhai Securities, more than 150 new car models are expected to be released in China this year, 80% of which are expected to be electric vehicles.

Andy Wong, a fund manager at LW Asset Management, analyzed, "Considering the high base effect of 2023, weak consumer demand, and China's difficult economic conditions, there are concerns about BYD's growth momentum this year."