Competition in the electric vehicle industry is fierce, with investor favorite Tesla competing against a host of Chinese rivals. But Jason Hsu, chairman and chief investment officer of Rayliant Global Advisors, believes one stock will stand out. This is Hong Kong-listed BYD, which he calls “the next Toyota.” “I think BYD is definitely the low-cost leader in terms of scale, volume, technology and maturity. So in the long run, we like it,” he told CNBC’s “Asian Street Signs.” Xu believes BYD “will definitely be a winner” as the electric vehicle market consolidates. “I think in three to five years, I could easily see BYD being priced at double the current price,” he said. Data from January showed that BYD overtook Tesla as the world’s largest electric vehicle manufacturer in the fourth quarter and surpassed Tesla’s output for the second consecutive year in 2023. After dominating China’s domestic market, BYD is now actively expanding overseas. Like Tesla, it doesn’t just sell cars and make its own batteries and other parts to stay competitive. BYD said last week that competition in China’s electric vehicle market will continue to intensify over the next two to three years, leading to lower prices. One potential issue for China’s electric vehicle market is the U.S.’s decision to increase tariffs, which is reportedly under discussion. But Xu believes that the market has already priced in the possibility of implementing tariff increases. He also noted that Toyota has experienced similar challenges in building share in the U.S. and European markets, and believes that BYD can also “find its way.” According to FactSet, analysts covering the stock see 81.1% potential upside to the stock’s average price target, with 94% of analysts giving it a buy rating. For global investors looking to buy BYD, its shares are listed on the Hong Kong Stock Exchange. Alternatively, they can buy through ETFs. BYD holds 7.9% of the KraneShares MSCI China Clean Technology Index ETF and 7.3% of the CoreValues Alpha Greater China Growth ETF. —CNBC’s Tanvir Gill and Evelyn Cheng contributed to this report.
