BYD’s Battery Division Emerges as Key Valuation Driver Amid Global Push

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While BYD is widely recognized as an automotive powerhouse, a deeper look reveals its battery manufacturing arm is becoming increasingly central to its investment story. This shift comes as the Chinese conglomerate accelerates its international footprint across the Americas, presenting a multi-faceted growth narrative for investors.

BYD's global expansion is gaining tangible momentum. On January 20, a shipment of approximately 5,800 hybrid and electric vehicles arrived in Argentina, marking the first large-volume delivery of Chinese new-energy vehicles to the country. The import through the Zárate port benefited from tariff exemptions.

North American markets are also in focus. In Mexico, despite new tariffs, local statistics cited by Bloomberg show significant growth for affordable BYD models. Chinese brands are capturing market share in the electric and plug-in hybrid segments that other manufacturers have largely neglected.

A potential new avenue has opened in Canada. A recently announced trade agreement could allow BYD to officially enter this market. The pact aims for over 50% of imported vehicles to be affordable electric cars priced under $35,000 within five years, potentially granting BYD access to an additional volume market in the lower-price segment.

The Hidden Value of the Battery Business

Market experts at Bernstein have reaffirmed their "Outperform" rating on BYD, placing particular emphasis on the concealed worth of its battery operations. Their analysis suggests this division alone could be valued at nearly the company's entire current market capitalization of approximately $115 billion.

According to Bernstein, BYD ranks as the world's second-largest battery manufacturer by EV installations, producing 70% more battery capacity than its third-place competitor. The firm highlights a period of robust expansion over the past twelve months:
* Total battery deliveries increased by 47% last year.
* External battery deliveries accounted for more than 10% of total revenue.
* Deliveries for energy storage systems more than doubled.
* Shipments to automakers including Xiaomi, Xpeng, and Toyota nearly tripled.
* Analysts project a further 35% growth in battery deliveries for 2026.

Bernstein calculates a fair value for BYD shares of 130 HKD, implying an upside potential of roughly 30% from current levels.

Ford Negotiations Highlight Strategic Importance

Reports of potential supply talks with Ford have drawn further attention to BYD's battery capabilities. The Wall Street Journal reported that the US automaker is negotiating with BYD to procure batteries for hybrid vehicles, a move driven by lower costs and access to advanced battery technology.

However, political resistance emerged swiftly. Peter Navarro, a former White House trade advisor, criticized the potential deal, questioning whether it would strengthen a Chinese supply chain. One discussed solution involves restricting the use of BYD batteries to markets outside the United States.

Ford remained cautious in its comments, declining to discuss specific conversations but confirming ongoing negotiations with various companies.

Production Forecast and Model Pipeline

Looking ahead, Bernstein forecasts BYD's domestic sales to rise by 10% to 5.4 million vehicles. Overseas sales are expected to grow by 4.4%, reaching 1.5 million units.

Furthermore, BYD plans to launch at least ten new models this year. Coupled with continued technological advancements in its batteries, these initiatives present several operational catalysts likely to support both the automotive and battery segments in the coming quarters.