BEIJING (Reuters) - Shares in Chinese electric car maker BYD Co Ltd fell more than 3 percent on Thursday, weighed down by concerns over government cuts to subsidies on new energy vehicles and the firm’s first-quarter sales, analysts said.
The Warren Buffett-backed car company, which is German automaker Daimler AG’s partner in China, said on Wednesday its electric car models were selling well and predicted a sharp first-quarter net profit jump.
But the comparison seemed skewed, as BYD’s first-quarter profit in 2018 fell sharply on cuts to subsidies for electric vehicles, prompting some analysts to say the forecast profit was below expectations.
The automaker’s current quarter sales was also a concern. According to BYD data, it sold around 70,000 vehicles in the first two months of this quarter compared to about 170,000 in the fourth quarter of last year. BYD has not released March sales numbers so far.
“BYD’s new energy vehicle sales in the first quarter is lower than the fourth quarter last year,” said Patrick Yuan, Hong Kong-based analyst at Jefferies.
The company sold 520,000 vehicles last year, up 27 percent from a year earlier. BYD, whose popular models include its Tang-series electric cars, has said it aims to sell 650,000 vehicles this year.
China’s market for electric cars is booming. Overall electric car sales there jumped 61.7 percent in 2018 to 1.3 million vehicles, according to top car industry body China’s Association of Automobile Manufacturers. It sees electric vehicle sales hitting 1.6 million this year.
But profits in the sector have been squeezed by fierce competition between established firms and rival startups, as well as moves by Beijing to cut subsidies for the market to improve product quality and standards.
China on Tuesday raised its standards for electric cars that qualify for subsidies and reduced the amount it is willing to provide to relevant companies.
“As a concentrated force to develop new energy vehicles, BYD has relied heavily on subsidies to survive. The rapid cut of subsidies has big impact on it,” Jefferies’ Yuan said.
Shares in the Shenzhen-based car maker fell more than 3 percent in both Shenzhen and Hong Kong in morning trading.
The company also said on Wednesday that it planned to issue up to 50 billion yuan worth of debt financing instruments, without specifying what it planned to do with the funds.
Reporting by Yilei Sun and Brenda Goh; Editing by Jane Merriman and Muralikumar Anantharaman