Forecasting EV Stock Trends Based on ARIMA Model Represented by Tesla and BYD

Abstract

In recent years, an increasing number of people have turned their attention to renewable energy, and sales of electric vehicles have skyrocketed, making electric vehicles (EVs) a very popular topic. To better understand the development of the electric vehicle market and provide some insights for investors, this study forecasts EV stock trends of two leading companies in the Electric Vehicle industry, Tesla and BYD, by the Autoregressive Integrated Moving Average (ARIMA) model. The data in this research includes a daily time series of stock prices. ARIMA model is chosen in this research for its effectiveness in predicting stationary time series data, for its effectiveness in predicting stationary time series data, particularly suitable given the limited data available in the recently emerged EV industry. This research demonstrates that both Tesla and BYD’s stock closing prices are not stationary data. After differencing, for Tesla, the predicted result suggests a slightly increasing trend, while BYD's prices are predicted to remain at the same level and relatively stable in future 100 days. The study provides insights into the EV stock market, indicating a potential upward yet not pronounced trend in the future. But such a stable price might be a good choice for the investor low-risk takers.