Empirical Study on the New Energy Vehicles Market in China —Based on the CAPM Model

As an emerging market in China, the new energy vehicle industry has developed rapidly during the recent ten years. Supported by national policy and increasing market demand, many giant foreign companies like Tesla, as well as domestic vehicle corporations such as BYD and NIO entered the market, which made the market becoming competitive. As a result, the Chinese new energy vehicle market got attention from more and more investors. Therefore, it is meaningful to discover the influence of risk imposed on the new energy vehicles market. CAPM is a traditional model which can explain the relationship between risk and return. This study empirically researches the effectiveness and practicality of the CAPM model in the Chinese new energy vehicle market. Using the observations of 30 A-shares of Shanghai stock exchange from January 2019 to January 2021, the study performed a two-stage regression test on β coefficient of each stock and portfolio. The results find that although the β value is associated with the equity return of the market, CAPM model does not have strong explanatory power in Chinese new vehicle market. It might indicate that security’s prices in Chinese new energy vehicle market are affected not only by systemic risk, but also by other factors.