Shares of China’s EV sales champion BYD plunged 14% in Hong Kong on Tuesday after local authorities launched a probe into air pollution claims over the company’s manufacturing facility in Changsha city, capital of south-central China’s Hunan province.
After a public holiday on Monday, Hong Kong-listed BYD shares opened with a 10% dip compared with last Friday and plunged as much as 14% before closing with a 6% decline at HK$215 ($27.4). The company’s shares listed in Shenzhen plunged 4% in the first trading hour, but closed at 233 yuan ($34.6) with a 0.3% increase.
The EV giant helmed by Wang Chuanfu, who was named one of The Green 30 for 2020 by Bloomberg due to BYD electric taxi’s contribution to CO2 emission reductions in Shenzhen, is ironically now involved in an alleged pollution scandal.
BYD is backed by US billionaire Warren Buffett, with Buffett’s Berkshire Hathaway Energy Company indirectly owning a 7.7% stake in the Chinese automaker as of late April.
Residents near the BYD factory in Yuhua District in Changsha had complained over the past month about a pungent smell coming from the site, saying the smell is so strong at night that it wakes people up, according to a report by the Chinese magazine China Philanthropist on Saturday.
About half of students from a class in a nearby primary school claim to have suffered nosebleeds within the past two months, adults have experienced nausea and persistent coughs, and residents who purchased testing devices detected indoor total volatile organic compounds (TVOCs) values that surpassed safety standards, the report said.
Last Friday, residents from several communities gathered at the entrances to the BYD factory to stage a protest.
But BYD insisted that the factory complies with China’s emission standards, saying on the Twitter-like Weibo platform on Saturday that it would seek legal actions against people who spread rumours that emissions from the factory had caused nosebleeds.
Some BYD Production Lines Seen Being Suspended
Sources told local media on Tuesday that some production lines at the BYD factory have been suspended for “rectification.” The Changsha government said on Sunday, on its official WeChat account, that the authorities had dispatched a task force to investigate the pollution claims at the BYD factory in Yuhua District.
Residents near BYD’s factory have attributed the plant’s increasing pollution to BYD’s surging sales that have pushed the factory to run day and night. A resident with the alias Liu Jun told news portal iFeng.com that the lights of the factory were regularly on until 4:30am over the last two months.
BYD sold 580,000 EV units last year topping the list in China, according to data from China Passenger Car Association. In the first four months of this year, it sold 392,400 EVs, more than 50% of its whole 2021 output.
The Yuhua factory, set to roll out its Phase II production set-up later this month, will become BYD’s largest production base in China with an output of 600,000 EVs a year, according to the communist party’s local newspaper, the Hunan Daily. The factory’s production output more than tripled year-over-year to 62,500 units in the first quarter.
Reports published by the local ecological environment authorities show that the Yuhua factory had been accused of emitting harmful pollutants that were causing respiratory problems for nearby residents in 2019 and 2021.
- By Iris Hong