Shares of Warren Buffett-backed BYD jump after EU unveils lower than expected tariff

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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.

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 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 (US$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’s move.

“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.”

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 Citi analysts in a note.