Research On New Energy Vehicle Enterprise Value Evaluation Based On Improved FCFF Model

The automotive industry plays an important role in the development of a country’s economy,but at the same time,the energy-saving and environmental protection problems of fuel vehicles are becoming more and more prominent,and now the development of new energy vehicles can effectively solve the energy and environmental problems.In the context of the "double carbon" target,the development of new energy vehicles has taken on a new development trend.Under the policy of subsidies,the development of new energy vehicles has entered the fast lane,but the changes in the general environment,such as the withdrawal of policy subsidies,have also brought instability to the development of new energy vehicles.As a strategic emerging industry supported by the state,new energy vehicle enterprises have a broad prospect,and with the increasing scale,property rights transactions are gradually increasing.However,the high growth and high risk characteristics of new energy vehicle enterprises make there are certain limitations in the use of traditional methods for valuation.Therefore,it is particularly important to make a reasonable and accurate assessment of the value of new energy vehicle enterprises.In this thesis,BYD is selected as a case study to investigate the applicability of the improved FCFF model to its valuation.After a brief introduction to traditional valuation methods and an analysis of the characteristics of new energy vehicle enterprises,the FCFF model in the income approach is selected for its valuation,and then the shortcomings of the FCFF model in valuing new energy vehicle enterprises are improved.Secondly,a dynamic discount rate was used to replace the static discount rate,taking into account changes in the capital structure of the enterprise and the proportion of current liabilities,etc.Finally,the forecast of perpetual growth rate was divided into three cases for consideration,and the weighted average method was used to forecast the perpetual growth rate.The comparison between the EVA model and the market approach was carried out and the following conclusions were reached:the improved FCFF model has a small margin of error in relation to the enterprise value as at the valuation benchmark date,which also reflects the better application of this method in the valuation of new energy vehicle enterprises.In addition,the appraised value at the valuation benchmark date is slightly higher than the enterprise value,indicating that BYD has investment value and high development potential.