BEIJING — Chinese language electrical automotive firm BYD is feeling the hit of rising battery materials prices.

Backed by U.S. billionaire Warren Buffett, the automaker introduced late Monday that web earnings attributable to shareholders within the first quarter will probably be between 200 million yuan ($30.4 million) and 300 million yuan.

“Affected by the worth fluctuation of upstream uncooked supplies, the revenue of car enterprise is but to be improved,” BYD stated in a launch, noting seasonal components additionally “have a sure influence” on new power passenger automobile gross sales.

In a rising marketplace for electrical automobiles, demand for the batteries to run them is rising. Because of this, Goldman Sachs analysts stated in a March 18 observe that the costs of the primary supplies will surge, driving battery prices about 18% higher.

“(BYD) mgmt. additionally talked about they’re going through stress on uncooked materials worth surge, e.g. lithium carbonate, electrolyte & copper,” Citi analysts stated in a observe, citing a name with BYD’s Chairman Wang Chuanfu on Tuesday.

The lower-than-expected first quarter steering solely accounts for 3% to five% of what analysts expect for the complete yr, Credit score Suisse analysts stated in a observe Tuesday. They lowered their worth goal on BYD’s Hong Kong-listed shares to 280 Hong Kong {dollars}, down from 310 Hong Kong {dollars} beforehand.

However that new goal nonetheless implies a achieve of greater than 60% for BYD from its shut Tuesday of 170.40 Hong Kong {dollars}.

The Credit score Suisse analysts attributed the decline in revenue steering to seasonal weak spot in automotive gross sales, decrease authorities subsidies and rising costs for battery uncooked supplies.

BYD reported web earnings attributable to shareholders of 4.23 billion yuan for all of 2020. The income share of cars and associated merchandise grew to 53% final yr, up from 49% a yr in the past, whereas that of batteries remained the identical at about 8%. The share of income from exterior Larger China climbed to 39% from 16% a yr in the past.

Whereas new electrical automobile fashions in a rising market helped enhance these earnings, Nomura analysts identified the outcomes come on the low finish of the estimated vary as “larger uncooked materials prices have affected near-term revenue progress.” Nomura maintained its worth goal on BYD of 300 Hong Kong {dollars}.

— CNBC’s Michael Bloom contributed to this report.