The Warren Buffett-backed electric car maker has been hit by rising battery costs

The Warren Buffett-backed electric car maker has been hit by rising battery costs

BYD, a Chinese battery and electric vehicle maker, is exhibiting a prototype of the Han EV Series at the 2020 Beijing Auto Show.

Evelyn Ching | CNBC

Beijing – China Electric Vehicle Corporation the world Feel the hit of the high costs of battery materials.

With the support of the United States Billionair Warren BuffettLate Monday, the automaker announced that net profit attributable to shareholders in the first quarter would range from 200 million yuan ($ 30.4 million) to 300 million yuan.

Influenced by the fluctuation in the prices of primary raw materials, BYD said in a statement, the profits of the auto trade have not improved yet, noting that seasonal factors “have a certain effect” on sales of new energy passenger cars.

In a growing market for electric cars, the demand for batteries to power them is increasing. As a result, Goldman Sachs analysts said on March 18 that prices for key materials would rise. Battery prices increase by about 18%.

They also mentioned that they are facing pressure on rising raw material prices, such as lithium carbonate, electrolyte and copper, ”Citi analysts said in a note citing a call with BYD chief Wang Quanfu Tuesday.

Lower-than-expected first-quarter guidance is only 3% to 5% of what analysts expect for the full year, Credit Suisse analysts said in a note on Tuesday. They lowered the target price for Hong Kong-listed BYD shares to HK $ 280, down from HK $ 310 previously.

But this new target still meant a gain of more than 60% for BYD from Tuesday’s close of HK $ 170.40.

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Credit Suisse analysts attributed the decline in profit targeting to seasonal weakness in auto sales, lower government subsidies and higher prices for battery raw materials.

BYD reported a net profit attributable to shareholders of 4.23 billion yuan for the whole year of 2020. The share of auto and related products revenue grew to 53% last year, up from 49% a year ago, while the share of batteries remained unchanged at around 8%. . The share of revenue from outside Greater China increased to 39% from 16% a year earlier.

While new electric vehicle models in a growing market helped boost these profits, Nomura analysts noted the results were at the lower end of the estimated range as “higher raw material costs impacted earnings growth in the near term”. Nomura has maintained its target price at 300 HK dollars.

Michael Blume of CNBC contributed to this report.

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