Latest news with #VincentSun
Gulf Insider
3 days ago
- Automotive
- Gulf Insider
BYD Price Slashing To Prompt Chinese EV Consolidation
BYD's aggressive discount campaign is shaking up China's EV market, pushing rivals to slash prices and raising concerns of an industry-wide 'race to the bottom,' according to Nikkei Asia. Since January, BYD has launched repeated limited-time offers. Its latest, running through June, cuts prices by up to 34% across 22 EV and hybrid models, with its Seagull now starting at just $7,700. Morningstar's Vincent Sun said investors are worried this signals a prolonged price war. 'I believe sales targets are the main driver behind this,' he said. BYD aims to sell 5.5 million vehicles in 2025, including 800,000 overseas. But its stock fell over 8% Monday and continued sliding Tuesday after the discount news. Great Wall Motor chairman Wei Jianjun hinted at growing debt in the industry, saying, 'The Evergrande of the automotive industry already exists; it just hasn't collapsed yet.' Many believe he was referring to BYD, whose debt ratio stood at 70.7% in March. BYD's Li Yunfei appeared to hit back with a cryptic social media post: 'A dog can bite a person! But a person cannot bite a dog!' Nikkei writes that other carmakers quickly followed BYD's lead. Geely's Galaxy brand launched deals with discounts up to 20,000 yuan, while Changan and Leapmotor also cut prices. Rising inventories are partly to blame—China had 3.5 million unsold vehicles in April, a 57-day supply, the highest since late 2023. BYD alone reported 154.4 billion yuan in inventory, up 33% from the previous quarter. Despite its lead, BYD is feeling pressure. Haitong's Oscar Wang said competitors are catching up in tech and pricing. 'While long-term reliance on price wars may erode brand premium value, it can help capture market share in the short term,' he said. Macquarie's Eugene Hsiao noted, 'We think BYD is looking to both sustain its position in the local EV market while also forcing competitors to match them on prices, which may accelerate future consolidation.' The Chinese government has signaled support for mergers among state-owned auto firms, and Geely recently announced it will take Zeekr private to cut overlapping costs. S&P Global warned that 'many entities [are] on an unsustainable path' and predicted 'a sweeping consolidation' ahead. 'For many firms, a merger or some form of partnership will be necessary for survival.' Also read: China Grants Visa-Free Entry To Bahraini Citizens Starting June 9
Yahoo
6 days ago
- Automotive
- Yahoo
BYD Just Broke the EV Market -- $7,700 Cars Set Off a Price War Frenzy in China
BYD (BYDDF) just threw down the gauntlet in China's electric vehicle war. The company slashed prices by as much as 34% on 22 of its models including its headline-grabbing Seagull, now priced at just $7,700. The promotion runs through June and looks less like a marketing campaign, more like a shot across the bow. Investors took notice fast: BYD shares dropped over 8% Monday, with other EV stocks sliding in tandem. According to analysts, this aggressive push is all about hitting BYD's ambitious 2025 sales goal of 5.5 million vehicles a 30% jump from last year. Morningstar's Vincent Sun summed it up: this is about volume, not margin. But the fallout is already spilling across the sector. Geely, Leapmotor, and others rushed to match BYD's discounts. Meanwhile, BYD's inventory ballooned to 154.37 billion yuan at the end of March up 33% quarter-on-quarter. The message is clear: Chinese EV makers are under growing pressure to move units, even if it means losing pricing power. Analysts say this kind of price war might be effective in the short run, but over time it could weaken brand value and squeeze out players with fragile balance sheets. Oscar Wang from Haitong warned that if no one steps in to cool things down, the second half of 2025 could become an all-out cost-cutting bloodbath. And the ground is already shifting. China's state-backed automakers are starting to merge Changan and Dongfeng are finalizing integration, and Geely is taking Zeekr private to tighten operations. S&P Global says this could be just the beginning. With auto inventories peaking and competition heating up at every price point, a new phase of forced consolidation may be on the horizon. For investors, the key question now is not just who can grow but who can survive. This article first appeared on GuruFocus. Sign in to access your portfolio
Business Times
20-05-2025
- Automotive
- Business Times
China EV battery giant CATL's Hong Kong IPO positive for mainland listings: Morningstar
[SINGAPORE] Chinese electric vehicle battery maker Contemporary Amperex Technology Company Limited (CATL) has drawn strong demand in its Hong Kong IPO on Tuesday - the world's largest listing this year. CATL shares jumped in its Hong Kong trading debut, raising HK$35.7 billion (S$5.9 billion) despite being blacklisted by the Pentagon and amid geopolitical unstability. Shares of CATL opened at HK$296 on Tuesday, up 13 per cent from their listing price of HK$263. CATL is the world's largest battery manufacturer, and has a 40% share of the global EV battery market. CATL's share price performance as it started trading signals strong interest from investors, said Morningstar. In a report on Tuesday (May 20), Vincent Sun, Morningstar senior equity analyst said that the CATL shares, as the largest maker of electric-vehicle batteries is known, are priced at the maximum indicative price, with close to 50 per cent subscribed by cornerstones. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'With 15 per cent additional shares issued through over-allotment option, total 135.6 million new H-shares account for 3 per cent of the enlarged capital,' Sun noted. CATL's primary listing is in Shenzhen, and Morningstar indicated that its shares in Hong Kong were priced at a 7 per cent discount to its China-listed shares. 'The strong interest in CATL probably reflects its industry leadership and the discount to the A-shares,' said Sun. Morningstar's fair value price on its China-listed shares is 260 Chinese yuan versus its last traded price of around 259 Chinese yuan, which it says is fairly valued. 'The dual listing is positive and helps lift sentiment that there will be more quality mainland companies listing in Hong Kong. A Hong Kong listing makes it more accessible to investors interested in China companies and it avoids running into the foreign shareholding limit,' Sun added. Sun believes that CATL will use most of the proceeds raised in its Hong Kong listing to fund the construction of battery plants in Hungary. The firm will also aim to complete the first phase of the project and commence the second phase in 2025 for a total remaining capital investment of 4.2 billion euros. The first two phases of the project will have a combined production capacity of 72 gigawatt-hours, amid increasing regulatory requirements on local production, Sun noted. CATL's biggest customer is Tesla, which accounts for 17% of the EV batteries sold in 2024, noted Macquarie in a note. Other customers include major Chinese automakers including Geely Auto, NIO, Li Auto, as well as foreign brands such as BMW and Volkswagen. - Please check back for more.
Gulf Today
06-02-2025
- Automotive
- Gulf Today
Nissan board agrees to scrap $60 billion Honda merger talks
Nissan is set to call off merger talks with rival Honda, a source said on Wednesday, abandoning a $60 billion plus tie-up that would have created the world's no.3 automaker and raising questions about how it will drive a turnaround by itself. Talks have been complicated by growing differences between the two Japanese automakers, two people familiar with the matter, both of whom declined to be named because they were not authorised to speak to the media, said earlier. Nissan shares slid more than 4 per cent on the Tokyo Stock Exchange, which temporarily suspended trading in the stock after a Nikkei business daily report that it would pull out. Honda shares continued to trade and finished the day up more than 8 per cent, in a sign of apparent investor relief. The development will raise fresh questions about how hard-hit Nissan, which is in the middle of a turnaround plan and aims to cut 9,000 employees and 20 per cent of global capacity, can ride out its latest crisis without external help. Honda, Japan's second-largest car maker behind Toyota , and Nissan, its third-largest, said in December they were in talks to create the world's third-largest automaker by sales, bulking up in an industry facing a huge threat from China's BYD and other electric vehicle entrants. Reuters reported earlier that Nissan could call off talks after Honda had sounded it out about becoming a subsidiary. Nissan balked because this was a departure from what was originally framed as a merger of equals, one source said. Nissan and Honda said in separate statements that the Nikkei report was not based on information announced by the companies and that they aimed to finalise a future direction by mid-February and announce it at that time. Honda, whose market value of about 7.92 trillion yen ($51.90 billion) is more than five times bigger than Nissan at 1.44 trillion yen, was increasingly worried about its smaller rival's progress on the turnaround plan, said a second source. The tie-up talks have coincided with disruption posed by potential tariffs from US President Donald Trump. Tariffs against Mexico would be more painful for Nissan than for Honda or Toyota, analysts say. 'Investors may get concerned about Nissan's future (and) turnaround,' said Morningstar analyst Vincent Sun, adding: 'Nissan also has a larger risk exposure to US-Mexico tariffs than Honda and Toyota'. Nissan has been hit harder than some rivals by the shift to EVs, having never fully recovered after years of crisis sparked by the 2018 arrest and removal of former chairman Carlos Ghosn. 'The news saying that Nissan did not want to be a Honda subsidiary appears to highlight that control was a contentious issue,' said Christopher Richter, Japan autos analyst at brokerage CLSA. 'Without being able to have control, Honda appears to be walking away.' Nissan's long-term alliance partner Renault had said it would be open in principle to the merger. The automaker owns 36 per cent of Nissan, including 18.7 per cent through a French trust.
Express Tribune
06-02-2025
- Automotive
- Express Tribune
Nissan calls off merger talks with Honda
Listen to article TOKYO: Nissan looks set to step back from merger talks with rival Honda, two sources said on Wednesday, calling into question a $60 billion tie-up to create the world's number 3 automaker and potentially leaving Nissan to drive its turnaround alone. Talks between the two Japanese automakers have been complicated by growing differences, according to multiple people familiar with the matter, all of whom declined to be named because they were not authorised to speak to the media. Reuters reported earlier that Nissan could call off talks after Honda sounded it out about becoming a subsidiary. Nissan baulked as this was a departure from what was originally framed as a merger of equals, one of the people said. It was not immediately clear if the merger could survive, with comments from the two sources appearing to leave open the option for a restart. Honda, whose market value of about 7.92 trillion yen ($51.90 billion) is more than five times bigger than Nissan's at 1.44 trillion yen, was increasingly worried about its smaller rival's progress on the turnaround plan, another source said. Nissan shares slid more than 4% on the Tokyo Stock Exchange, which temporarily suspended trading in the stock after a Nikkei business daily report that the automaker would pull out of talks. Honda shares rose more than 8%, a sign of apparent investor relief. Nissan and Honda said in separate statements that the Nikkei report was not based on information announced by the companies and that they aimed to finalise a future direction by mid-February. Nissan's long-term alliance partner, French carmaker Renault would "vigorously" defend the interests of the group and its stakeholders, a spokesperson for the group said, adding that recent press information indicated no decision had yet been made on the possible end of the talks. Renault, which owns 36% of Nissan, including 18.7% through a French trust, has previously said it would be open in principle to the merger. The prospect of the merger being scuppered raises questions about how hard-hit Nissan, which is in the middle of a turnaround plan and aims to cut 9,000 employees and 20% of global capacity, can ride out its latest crisis without external help. Honda is Japan's second-largest car-maker behind Toyota and Nissan is the third-largest. The two said in December they were in talks to create the world's third-largest automaker by sales, a move that would allow them to bulk up in an industry facing a huge threat from China's BYD and other electric vehicle entrants. The talks have also coincided with disruption posed by potential tariffs from US President Donald Trump. "Investors may get concerned about Nissan's future (and) turnaround," said Morningstar analyst Vincent Sun, adding: "Nissan also has a larger risk exposure to US-Mexico tariffs than Honda and Toyota". Nissan has been hit harder than some rivals by the shift to EVs, having never fully recovered after years of crisis sparked by the 2018 arrest and removal of former chairman Carlos Ghosn. "The news saying that Nissan did not want to be a Honda subsidiary appears to highlight that control was a contentious issue," said Christopher Richter, Japan autos analyst at brokerage CLSA. "Without being able to have control, Honda appears to be walking away." Nissan and Honda had initially said they planned to decide the direction of the integration by the end of January, but that was later pushed back to mid-February. Sources told Reuters last month that Nissan's smaller alliance partner Mitsubishi Motors which had considered joining the merger, might not do so.
