Financial risk analysis and control of new energy vehicle companies——Taking BYD Company as an example

Wenming Cao; Min Hong; He Yuan; Pierre Failler; Wenming Cao; Min Hong; He Yuan; Pierre Failler

doi:10.3934/GF.2026019

Green Finance

2026, Volume 8, Issue 3: 535-555. doi: 10.3934/GF.2026019

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Research article

Financial risk analysis and control of new energy vehicle companies——Taking BYD Company as an example

1.
Business School, Hunan Institute of Technology, Hengyang, Hunan, China
2.
School of Accounting, Economics and Finance; Centre for Blue Governance, University of Portsmouth, UK

Received: 28 January 2026 Revised: 11 June 2026 Accepted: 24 July 2026 Published: 24 August 2026
JEL Codes: G15, F36, C40

China plans to peak CO₂ emissions before 2030 and achieve carbon neutrality before 2060. Under this "dual carbon" strategic goal, the new energy vehicle (NEV) market continues to expand, and financial risks are becoming increasingly prominent. In this paper, we took BYD as a case study and analyzed its financial risks from four dimensions, financing, investment, operation, and growth, using financial ratio analysis and horizontal comparison with SAIC Motor, Great Wall Motor, and Tesla over the period 2019-2024. The results revealed that (1) BYD's current ratio declined from 0.99 in 2019 to 0.75 in 2024, while its quick ratio fell from 0.75 to 0.51 over the same period, indicating deteriorating short-term solvency. (2) The cash ratio improved from 0.12 in 2019 to 0.31 in 2024, suggesting strengthening immediate payment capacity. (3) BYD's debt-to-asset ratio remained high, rising from 68.00% in 2019 to 74.6% in 2024, exceeding the industry average of approximately 60%, reflecting significant long-term solvency risk. (4) Net cash flow from investing activities was consistently negative from 2019 to 2024, reaching -1,291 billion yuan in 2024, indicating insufficient investment-related cash liquidity. (5) Accounts receivable turnover increased substantially from 2.74 times in 2019 to 12.52 times in 2024, while inventory turnover improved modestly from 4.12 to 6.03 times, though both remained below peer levels. To mitigate these risks, we proposed measures, including optimizing the capital structure, strengthening investment benefit analysis, improving accounts receivable and inventory management, and increasing R&D investment.
- financial risk,
- new energy vehicles,
- risk identification,
- risk control,
- BYD
Citation: Wenming Cao, Min Hong, He Yuan, Pierre Failler. Financial risk analysis and control of new energy vehicle companies——Taking BYD Company as an example[J]. Green Finance, 2026, 8(3): 535-555. doi: 10.3934/GF.2026019

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Abstract

China plans to peak CO₂ emissions before 2030 and achieve carbon neutrality before 2060. Under this "dual carbon" strategic goal, the new energy vehicle (NEV) market continues to expand, and financial risks are becoming increasingly prominent. In this paper, we took BYD as a case study and analyzed its financial risks from four dimensions, financing, investment, operation, and growth, using financial ratio analysis and horizontal comparison with SAIC Motor, Great Wall Motor, and Tesla over the period 2019-2024. The results revealed that (1) BYD's current ratio declined from 0.99 in 2019 to 0.75 in 2024, while its quick ratio fell from 0.75 to 0.51 over the same period, indicating deteriorating short-term solvency. (2) The cash ratio improved from 0.12 in 2019 to 0.31 in 2024, suggesting strengthening immediate payment capacity. (3) BYD's debt-to-asset ratio remained high, rising from 68.00% in 2019 to 74.6% in 2024, exceeding the industry average of approximately 60%, reflecting significant long-term solvency risk. (4) Net cash flow from investing activities was consistently negative from 2019 to 2024, reaching -1,291 billion yuan in 2024, indicating insufficient investment-related cash liquidity. (5) Accounts receivable turnover increased substantially from 2.74 times in 2019 to 12.52 times in 2024, while inventory turnover improved modestly from 4.12 to 6.03 times, though both remained below peer levels. To mitigate these risks, we proposed measures, including optimizing the capital structure, strengthening investment benefit analysis, improving accounts receivable and inventory management, and increasing R&D investment.

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