Wang Chuanfu speaks during a news conference in Hong Kong, China, on March 29, 2023.
Bertha Wang/Bloomberg
Wang Chuanfu, chairman and CEO of BYD, saw his net worth drop by as much as $1.5 billion on Monday, as investors dumped shares of China’s electric-vehicle companies across the board on concerns that Tesla had ignited another price war.
Wang’s fortune is derived from his 17.6% personal stake in BYD, whose shares had plunged 8.7% before recovering some of the losses to finish 6.2% lower. Despite the drop in his net worth, Wang is currently China’s ninth-richest person, worth an estimated $18.2 billion, according to Forbes’ Real-Time Billionaires List.
BYD, which is backed by Warren Buffett’s Berkshire Hathaway, has generated at least two other billionaires: Wang’s cousin Lu Xiangyang with a net worth of $12.6 billion, and Xia Zuoquan with $3.5 billion. Their combined wealth loss for the day amounted to $740 million.
Domestic rivals of BYD also came under heavy selling pressure, with a 3% drop posted by billionaire He Xiaopeng’s Xpeng, and a 3.2% slide at William Li’s Nio.
The cue that sent stocks tumbling came from Tesla unveiling a new round of discounts. In a post published on China’s Weibo microblogging platform, the American EV maker controlled by billionaire Elon Musk said it would cut the prices of the Long-Range and Performance versions of the Model Y sport utility vehicle by 14,000 yuan ($1,900) to $41,000 and $48,000, respectively. Tesla also extended a $1,100 insurance subsidy on newly purchased Model 3 rear-wheel drive cars to the end of next month.
Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities International, says the price cuts had spooked investors who were already on edge due to the country’s deepening real estate crisis, which has made them risk averse and more cautious towards high-valuation stocks.
“EV stocks had experienced significant gains in the previous period, resulting in more pronounced downward pressure in this recent correction,” he says. “Secondly, investors are also concerned about intensified competition within the industry.”
And Yale Zhang, a Shanghai-based managing director at consultancy Automotive Foresight, says price cuts probably amount to an easy but effective way for Tesla to defend its market share in China, partly because the company can afford to repeatedly do so given its fatter profit margins. Tesla actually fired the first salvo of the price war last October, and followed this year with more discounts that make its best-selling Model Y and Model 3 cars retail for about one-third less than their respective prices in the U.S.
But the company has been losing ground recently as local EV makers race to launch newer models with more competitive pricing. Tesla saw sales of its China-made vehicles fall by about one-third in July from June, while BYD extended its lead with its Dynasty and Ocean series of EVs.
Wang recently called on fellow Chinese automakers to “demolish the old legends and achieve new world-class brands.” The Shenzhen-based automaker was marking a production milestone just last week, when the billionaire said, “I believe the time has come for Chinese brands,” – a tribute that drew widespread praise in the country as well as warnings that his message may attract regulatory scrutiny for the brands in overseas markets.