Citigroup's report stated that after the EU announced the temporary tariffs on imported Chinese pure electric vehicles yesterday evening (12th) Central European Time, the new tax rates imposed on BYD Company Limited (01211.HK), Geely (00175.HK) and SAIC Motor Corporation Limited (600104.SH) were 27.4% (i.e. 10% + 17.4%), 30%, and 48.1% respectively. The new tax rate for other cooperating investigated car companies was 31%, and for non-cooperating investigated car companies was 48.1%.

The bank initiated a 30-day bullish observation on BYD Company Limited, believing that the result of the EU tariff increase is slightly bullish for BYD Company Limited. The bank originally expected the tariff to reach 30%, and improved BYD Company Limited's export growth visibility in the second and third quarters of this year. BYD Company Limited's tariffs in the EU are lower than those of other Chinese companies, which means that the group's market share in the EU has expanded.

According to the bank's analysis, even if the EU tariff is increased to 27.4%, BYD Company Limited's business exporting to Europe can still achieve a net profit margin of 8.6% under the current production scale (assuming that 50% of the tariff increase is borne by customers), which the bank believes is much higher than the net profit margin per vehicle in the domestic market of the group. The bank expects BYD Company Limited's net profit per vehicle in the second quarter to be at least RMB8,000, maintaining its forecast of the full-year average net profit per vehicle of RMB8,000 to RMB10,000. The bank set a target price of RMB475, rated it as "buy", and maintained its forecast of the net profit of RMB51.7 billion for the fiscal year 2025.