BYD allayed UBS's concerns about increased competition and declining market share with 90,000 NEV sales per month in the fourth quarter.

UBS upgraded its rating on BYD's Hong Kong-traded shares and raised its price target significantly, citing the company's strong sales, in its latest research note.

UBS upgraded its rating on BYD from "Sell" to "Buy" and raised its price target by 122 percent to HK$320 from the previous HK$144, according to the note shared today by news portal Sina.

By the close of trading today, BYD was down 0.65 percent to HK$245.6 in Hong Kong, and the price target implies a 30 percent upside.

(Graphic by CnEVPost)

BYD's long-established branding in the mass-market electric vehicle segment could help defend its roughly 20 percent market share, while its e platform 3.0 and Ocean series models could be further growth drivers this year, UBS said.

BYD officially launched the Dolphin model, which is the first model of the e platform 3.0, at the Chengdu Auto Show on August 29, 2021.

The Dolphin model sold 10,016 units in December, up 13.7 percent from 8,809 units in November, data released by BYD last week showed.

This is the first time the model has sold more than 10,000 units in the five months since its launch, with cumulative sales of 29,598 units since August.

At the 2021 Guangzhou Auto Show last November 19, BYD unveiled the Yuan PLUS, the company's first SUV based on e-platform 3.0 and the platform's second model after the Dolphin.

Yuan PLUS opened for pre-sale in China on January 1 and will be officially launched in the first quarter. The model will also be launched in Singapore in the second quarter of 2022.

UBS is also bullish on BYD's battery business, saying that with continued capacity expansion and external certifications, its blade batteries could also reach a mass external sales tipping point.

UBS said that while BYD is China's second-largest electric vehicle battery maker, it has yet to achieve large-scale external sales.

However, the bank expects its blade batteries could change that soon for a number of reasons, including:

Blade batteries using lithium iron phosphate (LFP) technology are gaining acceptance among global automakers for their cost advantages, cobalt-free chemistry, safety performance and cycle life.

Integration through CTP (Cell To Pack) battery pack technology allows for packs with energy densities up to 140Wh/kg, which is close to many NCM (Nickel Cobalt Manganese) battery solutions.

Further capacity expansion and automaker certifications.

Electric vehicle battery supply continues to be tight.

UBS expects BYD's batteries to have 20 percent external sales this year and then increase again after that.