BYD Faces $45B Selloff but Overseas Growth and Tech Shift Offer Hope
BYD has seen more than $45 billion in market value erased as its Hong Kong shares tumbled over 30% in the past four months, the weakest performance among major EV makers. Analysts have become increasingly skeptical of its pricing-driven strategy, with sell ratings at the highest level since 2022, according to Bloomberg.
Second-quarter earnings dropped 30% — the first decline in over three years — as competitors like Geely and Leapmotor gained market share. Investors are concerned that BYD’s heavy discounting, aimed at boosting volumes, is hurting profitability and clashing with Beijing’s push against “involution,” a practice officials say pressures margins and damages the country’s industrial reputation. The company has cut its 2025 sales target to 4.6 million units from 5.5 million, leaving an ambitious 1.7 million deliveries needed in the year’s final four months. This will be tough given an aging product portfolio and stricter regulations, especially since its next wave of models won’t arrive until early 2026.
Analysts stress that even market leaders can’t keep product cycles fresh indefinitely, with buyers increasingly turning to newer offerings from rivals. Still, BYD’s international expansion offers a brighter outlook. Goldman Sachs estimates overseas sales could reach 900,000 to 1 million units next year, ahead of the firm’s 800,000 goal. The stock also looks inexpensive, trading at about 17 times forward earnings compared to its three-year average of 20. Options interest has surged too, with outstanding contracts nearly tripling since June to a record 600,000.
Looking forward, upcoming vehicle launches are expected to showcase design improvements, wider deployment of BYD’s “God’s Eye” autonomous driving system, enhanced battery tech, and longer-range plug-in hybrids. Some investors argue that repositioning BYD as a technology innovator — rather than just a cost-efficient carmaker — could restore confidence and trigger a valuation re-rating, even if near-term earnings remain pressured.
