China's electric-vehicle stocks have been led by BYD Co., which has outperformed its peers with its recent technological advancements. Despite significant losses in EV stocks globally, BYD's shares have risen by over six percent in Hong Kong this year, driven by the launch of its fifth-generation plug-in hybrid drive system. In contrast, shares of its smaller competitors, Li Auto Inc., Xpeng Inc., and Nio Inc., have each plummeted by at least 45 percent due to concerns over waning EV demand and an ongoing price war.
According to market analysts, the gap is expected to widen further. BYD's latest plug-in hybrid platform enables vehicles to travel over 2,000 kilometers equivalent to the distance between Singapore and Bangkok without needing to recharge or refuel. This technology was launched in two models priced under 100,000 yuan. Plug-in hybrids, which bridge the gap between traditional gas-powered vehicles and fully electric ones, are being promoted as a potential growth area as the market for pure EVs reaches saturation.
“We are particularly optimistic about BYD’s plug-in hybrid electric vehicle potential and overseas expansion opportunity, especially given the slowing global EV transition" said Bing Yuan, a fund manager at Edmond de Rothschild Asset Management in Paris. BYD sold nearly one million fully electric and hybrid cars in the second quarter, setting a new record according to data. In June alone, sales of its plug-in hybrids surged by 58 percent year-on-year, exceeding 195,000 units and surpassing sales of its battery-only vehicles.
The Shenzhen-based company has been working on its plug-in hybrid platform, known as DM-i, for nearly 20 years. The fourth generation of this technology, introduced in 2021, helped BYD become China's top-selling car brand last year. The latest technology is featured in two models, the Seal 06 DM-i and Qin L DM-i, which have a starting price of 99,800 yuan (approximately ₹11.4 lakh), demonstrating BYD’s cost-efficiency. Since their launch, these two models have garnered over 120,000 orders.
BYD’s overseas growth potential is another key point boosting investor confidence. The automaker has been ramping up efforts to make a breakthrough in Europe, including making a marketing push at the current European Football Championship and opening a new flagship showroom on the Champs-Elysees in Paris. The carmaker is betting that higher-margin exports will help cushion the impact on its profits from the long-term price war in China.
The company has remained relatively unaffected by the European Union's preliminary tariff increases, as EU regulators last month assigned it a lower-than-average tariff rate. The export growth outlook for its plug-in hybrids remains positive, as the additional levies are only being imposed on pure electric vehicles. “We see BYD as being differentiated from Chinese peers and quite well-positioned thanks to its strong export proposition", said Xin-Yao Ng, director of investment at abrdn Asia Ltd. in Singapore.