The EV charger maker, backed by BYD, is betting on overseas expansion and premium products to escape China's price wars

Electric vehicles need somewhere to plug in, and that simple fact has created a booming business for the companies making those chargers. Shanghai Zhida Technology Development Co. Ltd. (2650) is riding that wave, with shares that have more than tripled since its Hong Kong IPO just two months ago.

The latest catalyst? A partnership with Saudi Arabia that sent the stock jumping 8.7% in a single day. Zhida announced plans to supply AC and DC EV chargers to Saudi Controls Ltd. over the next five years, a deal valued at more than 100 million yuan (roughly $14 million). It's not a massive contract on its own, but it signals something bigger: the company's determination to escape China's brutally competitive, low-margin domestic market.

Why Saudi Arabia Matters

China dominates global EV sales, accounting for more than half the market. But Saudi Arabia is making an aggressive push into the space as part of its Vision 2030 initiative to move beyond oil and gas. The kingdom plans to invest at least $39 billion by 2030 to build out its new energy vehicle ecosystem, and you can't have that ecosystem without charging infrastructure.

The broader Middle East opportunity is substantial. Home EV charger sales in the region hit 106,400 units last year and are projected to explode to 872,000 by 2029. That's 52.3% annual growth, far exceeding the global average of 20.3%. Only Southeast Asia, with expected growth of 64.9%, is growing faster.

For Zhida, which claims 13.6% of China's home EV charger market and 9% globally, this represents a chance to sell into markets where margins aren't being squeezed quite so hard. The math is compelling: overseas chargers fetched an average of 1,089.3 yuan apiece in the first quarter, more than 50% higher than the 723.7 yuan average for domestic sales.

The BYD Connection

Founded in November 2010 by Chairman Huang Zhiming, Zhida started making EV chargers and smart home accessories in 2015. The company began selling overseas in 2021 and reorganized as a joint-stock company in September 2022, paving the way for its eventual listing.

Among its strategic investors is BYD, the world's largest new energy vehicle maker. Domestic media reports identify BYD as Zhida's largest customer, and it's easy to see why the company would want a stake in its supplier. Zhida's top five customers, primarily automakers, retailers and distributors, account for 53.5% of revenue, with the largest representing 17%.

The Profitability Problem

Here's where things get complicated. Despite its rising sales and tripled stock price, Zhida isn't making money. The company's net loss quadrupled to 239 million yuan last year. This year's first quarter brought a loss of 17.05 million yuan, though that does represent a 45.8% improvement year-over-year.

The pressure on margins is real. Sales to automakers bring volume but come with lower prices. Those bulk sales totaled 85,000 units in the first quarter, down from 125,000 in the year-ago period. Worse, average prices for those chargers dropped 7.5% year-over-year, falling from 780.8 yuan to 721.9 yuan.

Seasonality also plays a role. Zhida typically sees stronger fourth-quarter sales when China's auto sector ramps up promotions to hit year-end targets, creating a corresponding spike in charger demand.

The Path Forward: Robots and Geography

Zhida's strategy to reach profitability runs on two tracks. First, accelerate international expansion where pricing power is stronger. At just 32.13 million yuan, international revenue represented only 14.8% of Zhida's first-quarter total, leaving substantial room for growth.

Second, push into higher-margin products. The company delivered 10 robotic chargers in the first quarter, which carry gross margins around 30%, roughly 10 percentage points above its mainstream chargers. These autonomous charging robots aren't just about better margins—Zhida sees them as crucial for vehicle-grid integration, enabling real-time data collection for efficient charging management and scheduling.

The company is optimistic about this segment, forecasting that robotic charger sales will roughly triple between now and 2029, reaching 902,000 annual units by then.

Investment Reality Check

EV chargers represent an essential niche in the growing electric vehicle ecosystem. But the barriers to entry aren't particularly high, especially for the lower-end models that make up Zhida's core business. Competition is fierce, and the company's ongoing losses remain a legitimate concern.

The stock has already tripled from its October IPO price of HK$66.92, fueled by expansion announcements and investor enthusiasm. At these levels, the easy gains may be behind us. The Saudi deal and similar partnerships are encouraging, but for the rally to continue, Zhida will need to show meaningful improvement in its fundamentals—specifically, a credible path to profitability.

For now, the market is betting on Zhida's international expansion strategy and higher-margin product mix. Whether that bet pays off depends on execution in new markets and the company's ability to escape the margin compression plaguing its domestic business. The charging infrastructure opportunity is real, but so is the competition.