BYD, the Chinese electric vehicle juggernaut headed by billionaire Wang Chuanfu, intends to raise HK$43.5 billion ($5.6 billion) in a share placement to deal with fierce competition at home and to expand abroad.
Shares in the dual-listed firm plunged 7.6% in Hong Kong and 4.4% in Shanghai as of 10:30 a.m. Tuesday after BYD announced plans to issue 129.8 million new shares at HK$335.2 apiece to undisclosed investors, according to a filing with the Hong Kong Stock Exchange the same day. That pricing was an 11.8% discount to BYD’s average closing price for the last 10 consecutive trading days as of March 3, the filing showed.
BYD’s stock is still up 30% in Hong Kong this year despiteTuesday’s drop. The company will use the proceeds for technology research and global expansion, it wrote in the filing.
The company wants to generate half its sales in overseas markets, a jump from 30% of total revenue of 301 billion yuan ($43 billion) in the first half of 2024, the latest financial results available. Overseeing that drive is executive vice president Stella Li, who was on the 2024 Forbes Asia’s Power Businesswomen list.
BYD is building a factory in Hungary, which is expected to start producing cars in the second half of this year. It has also announced plans to construct a major facility in Mexico, which will reportedly create about 10,000 jobs.
Intense competition at home played a role in BYD’s need to raise funds as well, Eric Wen, head of research at Hong Kong-based research firm Blue Lotus Capital Advisors, says by messages sent via WeChat.
To fend off competitors including billionaire Lei Jun’s Xiaomi, whose Hong Kong-listed shares have surged over 40% this year on EV optimism, BYD is introducing advanced intelligent driving features to some of its entry-level models. In February, the company announced its “God’s Eye” plan, where certain models priced below 100,000 yuan ($13,700) will be equipped with self-driving functions such as autonomous navigation and self-parking.
That plan may cause the company’s gross margin to drop by 2 to 3%, according to Wen. But as its overseas factories start to produce cars, BYD may ship 5.7 million EVs this year, a 34% increase from the 4.27 million cars sold in 2024, Wen says.
