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Warren Buffett-backed Chinese EV giant BYD Co. Ltd. (OTC:BYDDF) (OTC:BYDDY) is set to inaugurate its first Southeast Asia factory in Thailand, a move that coincides with the implementation of new tariffs on Chinese EVs in the European Union.
What Happened: BYD’s $486 million facility in Thailand’s Rayong province is expected to be operational on Thursday, reported Nikkei on Wednesday. The factory will focus on exporting most of its 150,000 annual capacity to other Southeast Asian countries and Europe.
The factory’s opening coincides with the EU’s imposition of new tariffs on Chinese EVs, in addition to the existing 10% tariff. The additional tariffs, including a 17.4% levy on BYD vehicles, are aimed at leveling the playing field for European brands against China’s heavily subsidized automotive industry.
“China is still destocking. There might be more cars sent to Southeast Asia because they can’t send them to Europe, and there is zero tariff in Thailand,” said Krungsri Securities analyst Naruedom Mujjalinkool.
HSBC analysts remain bullish on BYD’s sales volume and market share growth, even though they have lowered their net profit forecast for the company by 8%. “We believe peers cannot easily replicate the company’s tech leadership, enhanced by a decade of innovation and unique vertical integration capabilities,” they wrote.
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Despite China’s denial of unfair subsidies, the new tariffs could potentially lead to an overflow of Chinese EVs into Southeast Asian markets, including Thailand, where trade barriers are low.
Why It Matters: The new factory in Thailand is part of BYD’s broader strategy to expand its global footprint. Recently, the company launched five electric models in Tunisia, including the Atto 3, as part of its expansion into African markets. This move underscores BYD’s aggressive international growth strategy.
Additionally, BYD has partnered with French car-leasing firm Ayvens SA to distribute its electric vehicles in Europe. This partnership aims to bolster BYD’s presence in key European markets such as France, the Netherlands, Belgium, and Luxembourg.
However, the company faces challenges. Berkshire Hathaway, led by Buffett, has been gradually reducing its stake in BYD. Despite this, BYD remains a dominant player in the Chinese automotive market, having driven Chinese automakers to outsell U.S. counterparts for the first time.
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Photo courtesy: Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
