Morgan Stanley discusses BYD's "5-minute supercharging": It's time to break through the biggest bottleneck in electric vehicle popularity

Morgan Stanley believes that BYD has brought the development of electric vehicles to a critical step.

On March 18, Morgan Stanley released a research report interpreting BYD's launch of the 1000kW charging system, which can provide a range of 400 kilometers for electric vehicles in just five minutes.

Morgan Stanley stated that BYD's newly launched 1000kW charging system is undoubtedly a striking marketing campaign aimed at reinforcing its leading position in battery and charging performance. At the same time, this technological advancement helps address consumer concerns about the range and charging experience of electric vehicles.

As of yesterday's close, BYD ADR has risen over 15% in the past five trading days, reaching $105.4.

Morgan Stanley believes that breakthroughs in autonomous driving and charging technology are two key factors driving the bottleneck in the electric vehicle market. Advances in autonomous driving technology will differentiate the driving experience from traditional fuel vehicles, while breakthroughs in charging technology will make the energy replenishment experience closer to that of traditional fuel vehicles.

Morgan Stanley expects that the annual penetration rate of new energy vehicles in China will reach about 50% this year, and will reach 75% by 2030, with sales penetration accelerating from 2027.

Unknown Factors Remain, Morgan Stanley Maintains "Hold" Rating

According to BYD's press conference, the new 1000kW charging system will first be applied to BYD's high-end models, such as the Han L and Tang L, with deliveries expected to start in April.

Morgan Stanley believes that price remains a key factor in car purchases. The pre-sale price of BYD is 270,000 RMB (approximately $37,000), which seems relatively conservative, but the official price announced in April may be significantly lower than the pre-sale price and pose strong competition to other B-class models priced between 200,000 and 250,000 RMB.

In addition, Morgan Stanley believes there are still some unknown factors:

• How long will it take for this technology to be deployed at over 4,000 qualified charging stations?
• What is its impact on battery life?
• How significant is the cost difference compared to the existing 800V platform (5C charging, 600 kilometers in 10 minutes)?

Morgan Stanley maintains a "Hold" rating on BYD while emphasizing the following points:

Upside Risks: Faster-than-expected overseas expansion, new energy vehicle demand exceeding expectations, and contributions from the consumer electronics business exceeding expectations.

Downside Risks: Obstacles to overseas expansion progress, new energy vehicle demand falling short of expectations, and gross margins below expectations