Short sellers target BYD, the world’s top EV maker, as rivalry intensifies

The put-to-call ratio based on total open interest rose, reflecting growing pessimism among options traders, despite BYD delivering more EVs than Tesla last quarter

BYD is regarded as a bellwether of the Chinese EV market – the world’s largest – and the positioning suggests mounting concerns about the sector’s prospects

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A visitor inspects a Chinese automaker BYD Seal electric car at the 40th Thailand International Motor Expo 2023 in Bangkok, Thailand, 04 December 2023. Photo: EPA-EFE

Published: 12:58pm, 4 Jan 2024

Bearish bets against Chinese electric vehicle maker BYD have surged to the highest since September, reflecting worries that sales growth may slow as competition intensifies.

Short interest on the shares accounted for about 5.5 per cent of the stock’s free float in Hong Kong as of Jan. 1, according to data from IHS Markit. The put-to-call ratio based on total open interest has climbed in the past month, suggesting growing pessimism among options traders even though the company delivered more EVs than Tesla last quarter.

BYD is regarded as a bellwether of the Chinese EV market – the world’s largest – and the positioning offers a snapshot of the mounting concerns about the sector’s prospects. Headwinds are building as Beijing struggles to jump-start growth and competition is heating up, with UOB Kay Hian predicting that the nation’s EV sales growth will halve to 17 per cent in 2024.

“There are concerns over BYD’s growth momentum this year given 2023’s high base effect and weak consumer demand amid China’s challenging economic environment,” said Andy Wong, fund manager at LW Asset Management Advisors.

A Chinese carmaker BYD Seal electric car is charging power at the 40th Thailand International Motor Expo 2023 in Bangkok, Thailand, 04 December 2023. Photo: EPA-EFE

BYD’s vehicle sales are expected to increase 24 per cent this year to 3.7 million units, after rising over 60 per cent in 2023, according to data compiled by Bloomberg. Over 150 new models are scheduled to be launched in China in 2024, of which 80 per cent will be electric vehicles, according to HSBC Qianhai Securities.