BYD’s Battery Logjam and Price War Squeeze Profits Even as Exports Hit New Record

BYD's record overseas shipments contrast with a 55% Q1 profit drop and eight-month domestic sales decline, as battery constraints delay deliveries and the company expands in Europe and Brazil.

Investors are struggling to reconcile two wildly different pictures of China’s largest electric-vehicle maker. On the one hand, BYD shipped a record 135,098 cars abroad in April, a 70% surge from a year earlier that pushed overseas sales to nearly 43% of total deliveries. On the other, net profit in the first quarter collapsed 55% to 4.09 billion yuan, while domestic passenger-vehicle sales have now fallen for eight consecutive months. The H-share, which closed at 96.45 Hong Kong dollars on May 15 and has drifted to around 98 Hong Kong dollars since, trades near its 52-week low.

Behind the export boom lies a bottleneck that is frustrating customers as much as management. Chairman Wang Chuanfu acknowledged on May 15 that the group’s battery capacity is stretched thin, with several models from the Dynasty, Ocean, Denza and Yangwang brands all ramping up simultaneously. Vehicles equipped with the second-generation Blade battery and fast-charging systems — including the Song Ultra EV and the Tang EV — face wait times of two to three months. The shortfall is expected to ease in the second half of 2026 as additional battery lines come online and the new generation is rolled out across more models.

The home market is BYD’s main headache. April domestic passenger-vehicle sales of 182,025 units were roughly 32% below the same month a year earlier. A brutal price war in China, the removal of subsidies and rising supply-chain costs have eaten into margins. To offset some of that pressure, the company has raised prices for optional smart-driving upgrades by more than 20%. The step, combined with new models featuring improved battery technology, is meant to prop up profitability until international volumes can compensate for the shrinking domestic contribution.

That international engine is firing on all cylinders. In Brazil, BYD overtook Volkswagen in April to become the market leader in new registrations — a first for a Chinese manufacturer in Latin America’s largest economy. In Europe, new registrations jumped 155% in the first quarter, and Germany alone set a monthly record of just over 4,700 vehicles in April. The group is also mooting the purchase of unused European factories and is in talks with Stellantis. Its premium brand Denza will launch in the UK later this year, with a target of around 30 European markets by the end of 2026, starting with the Z9GT and the seven-seater D9.

At home, BYD is accelerating its charging infrastructure to support the wave of new models. By mid-May it had nearly 6,000 fast-charging stations across 312 Chinese cities, with an ambitious goal of 20,000 stations by the end of 2026. That network is critical for the success of the next-generation Blade battery and the rapid-charging systems that are currently pacing production.

Analysts remain broadly upbeat despite the stock’s slide. The average target from 25 analysts still stands at 124 Hong Kong dollars, with Citigroup maintaining a buy rating and pointing to the structural growth in electric vehicles. The immediate technical support sits at around 97 Hong Kong dollars, a level the share price has been testing. The market is waiting for proof that the production bottlenecks will indeed be cleared in the second half, and for international growth to start offsetting the margin erosion that has punished BYD’s bottom line and its share price alike.