13/06/24, 10:24 Shares of Warren Buffett-backed BYD jump after EU unveils lower than expected tariff

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BYD Co Ltd
Shares of Warren Buffett-backed BYD jump after EU unveils lower than
expected tariff
Stock of Tesla’s China rival rises as much as 9% following Brussels’ announcement of electric vehicle
import duties

The European Commission hit BYD, which is backed by Warren Buffett’s Berkshire Hathaway, with a lower than expected
additional tariff of 17.4% © Raul Ariano/Bloomberg

Edward White in Shanghai and Gloria Li and William Sandlund in Hong Kong 6
HOURS AGO

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BYD’s Hong Kong-listed shares jumped as much as 9 per cent on Thursday after
European tariffs on electric vehicle imports from China were lower than market
forecasts.

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13/06/24, 10:24 Shares of Warren Buffett-backed BYD jump after EU unveils lower than expected tariff

The European Commission on Wednesday unveiled additional provisional duties

of 17 to 38 per cent on EVs imported from China, on top of an existing 10 per cent
tariff.

The announcement came after a months-long probe into China’s state subsidies for
the sector and one month after US President Joe Biden imposed a 100 per cent
tariff on Chinese EVs shipped to the US.

Brussels hit BYD, which is based in Shenzhen and backed by Warren Buffett’s
Berkshire Hathaway, with an additional tariff of 17.4 per cent, the lowest among
the three companies named by the commission.

BYD is among the best-placed Chinese companies to navigate the new tariffs
thanks to its investment in an EV factory in Hungary, allowing it to produce cars
locally, and high profit margins.

“BYD really caught a break with the lower than expected added tariff rate,” said Lei
Xing, founder of AutoXing, a Chinese car industry consultancy, adding he had
expected additional tariffs as high as 40 per cent.

The carmaker’s shares pared gains to be 6 per cent higher at HK$233 ($30) in
afternoon trading in Hong Kong.

Officials in Beijing and state media slammed the tariffs as the latest example of
western protectionism against China. They also highlighted opposition to the
tariffs from within the bloc and the European automotive industry.

“The tariff hike will push Chinese carmakers to localise their production in
Europe,” said Cui Dongshu, secretary-general of the China Passenger Car
Association.

The EU said companies that did not comply with its anti-subsidy investigation,
announced last September, would be subject to the 38 per cent rate.

That included SAIC, a state-owned manufacturer that dominates the lower end of
Europe’s EV market through its MG brand.

The Shanghai-based group on Thursday rebuked the commission.

“We rely on technological innovation, instead of government subsidies,” the

company said in a statement. “The [tariff] decision is not only against market
economy principles and international trade rules, but also might have an adverse
impact on the stability of the global auto supply chain as well as economic and
trade co-operation between China and the EU.”

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13/06/24, 10:24 Shares of Warren Buffett-backed BYD jump after EU unveils lower than expected tariff

SAIC, China’s second-largest car exporter, said in May that European investigators
had sought to extract “commercially sensitive information”, including about its
battery chemistry. SAIC said it had refused to hand over the information.

SAIC shares were slightly lower in Shanghai on Thursday, while private-sector

groups Geely, Nio and Xpeng edged higher.

The higher tariffs will probably spur further consolidation in China’s car industry,
favouring larger companies including BYD and Geely over smaller domestic
brands, said Citigroup analysts in a note.

Geely, which owns Volvo Cars and will be hit with additional individual tariffs of
20 per cent, said it felt “great disappointment” at an EU decision that was “not
constructive”.

“Geely Holding has made extensive investments into Europe, enhancing the
innovative capabilities of the regional industrial value chain and creating tens of
thousands of high-value career opportunities in Europe,” the company said on
Thursday.

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