Shares down, BYD airs grim outlook for EV

Shanghai July 22 (Gasgoo.com) BYD (01211.HK) shares closed at 50.1 HK dollars yesterday. Despite a slight increase over the previous day, the company's share price has fallen by 40.4% over the past three months, compared to its monthly high of 84 HK dollars on April 7, First Financial Daily reported.

The main reason for the continuous decline in BYD's share price is that its electric cars cannot achieve commercialization in a short term, said Cao He, an auto analyst with Mingzu Securities Co.

China released a plan to subsidize private purchases of electric cars in June this year. BYD's F3DM plug-in hybrid sedan and e6 electric car were both listed on the catalog as energy-efficient models to qualify for the government subsidies. Consumers can get the government subsidy of 50,000 yuan ($7,320) for buying an F3DM car and of 60,000 yuan for buying an e6 electric car.

Moreover, the local government of Shenzhen, a southern boom town of China, initialized a green-car subsidy pilot project in July to boost purchasing of new energy vehicles. The Shenzhen government added another 30,000 yuan and 60,000 yuan to the plug-in hybrid electric vehicle and pure electric vehicle respectively.

Although motivated by the favorable governments' subsidies, BYD sales have been failing to achieve its expected goals. Reportedly, BYD started selling its F3DM cars to private consumers in March 29, but sales were disappointing with only 14 units sold in April, 2 units in May and 12 units in June, which is far short of its sales target of 1000 units for 2010.

The Chinese government's new-energy vehicle subsidy is only a pilot program. To mass-produce the electric cars is still a long way ahead. Therefore, economies of scale may not be able to work magic in a short time with the high cost of battery packs and inadequate support facilities for electric vehicles, an industry expert said.