By Kimberley Kao

Chinese automaker BYD said it plans to raise $5.6 billion via a share placement to enhance investments in cutting-edge technology and strengthen its competitive edge over rival Tesla.

BYD plans to sell 129.80 million shares priced at 335.20 Hong Kong dollars each, equivalent to US$43.10, it said in a stock exchange filing Tuesday. The shares are priced at an 11.8% discount to the average closing price of HK$380.10, for the last 10 consecutive trading days up to and including March 3, it said.

The company expects to raise about HK$43.51 billion in gross proceeds, equivalent to US$5.59 billion, it said.

BYD intends to use part of the proceeds for research and development and accelerate its overseas expansion. It will also continue to invest in R&D related to the field of intelligence driving, it said.

BYD's rationale for the share placement is reasonable, said Eunice Lee, a senior analyst at Bernstein in a note. "We have long been bullish on the company's overseas potential," Lee said.

However, there will likely be short-term weakness in shares today given the equity placement, Lee said.

The fundraising comes as the competition in the new energy vehicles industry is intensifying. BYD has been widening its lead over Tesla in artificial-intelligence-powered driving technology for Chinese car buyers, with the introduction of a new system for low-price mass-market vehicles.

The advances by BYD and other Chinese automakers contrast with Tesla's inability to release its latest driver-assistance software in China, owing to what Chief Executive Elon Musk described in January as regulatory hurdles.

AI-powered software for autonomous driving is evolving quickly in China, the world's largest EV market. Startups XPeng and Li Auto as well as supplier Huawei Technologies and others have all introduced market sophisticated driving-assistance technology.

BYD sold 3.7 million passenger cars in China in 2024, up 37% from the prior year. Tesla's sales in comparison rose 9% to around 660,000 cars. Globally, BYD is nipping at Tesla's heels as the largest maker of full EVs.

Shares of BYD in Hong Kong have gained 36% so far this year, outperforming the benchmark Hang Seng Index's 15% rise.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

March 03, 2025 19:36 ET (00:36 GMT)

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