China’s electric carmakers battle for survival after subsidies scaled back

Bloomberg

When Elon Musk’s Tesla Inc delivered positive earnings few saw coming last quarter, China’s top electric carmakers were weathering a historical contraction in demand.
Warren Buffett-backed BYD Co, the country’s biggest maker of new energy vehicles — all-electric, fuel-cell and plugin hybrid cars — just reported an 89% slump in third-quarter earnings and warned profit could fall as much as 43% this year. BAIC BluePark New Energy Technology Co, China’s biggest maker of all-electric automobiles, also forecast a 2019 loss in a grim earnings update.
In a battle for survival, hundreds of Chinese EV makers are trying to convince buyers that it’s worth paying higher prices than opting for cheaper gas
guzzlers.
It’s not working at the moment. Electric-car sales fell for three straight months through September, as the government —after spending billions of yuan to nurture the industry —scaled back subsidies.
BYD said in October that its September sales fell 15%. While the phasing out of subsidies delivers a blow to BYD’s fourth-quarter earnings, some pressure could be eased thanks to its first-mover advantage in battery-only and hybrid vehicles, according to Bloomberg Intelligence analyst Steve Man.
Shares of BYD slid 5.6% in Hong Kong, hitting their lowest since February 2016. Daiwa Securities downgraded its rating to hold from buy, saying BYD’s weak outlook for the current quarter is concerning as it is peak season for sales.