BYD’s Canadian Gateway Opens as Record Exports Mask Profit Erosion

Despite securing a Canadian EV quota and achieving record exports, BYD's stock falls 24% YTD as domestic price wars and a 55% profit plunge weigh on investor sentiment.

BYD is racing to secure a foothold in North America, yet the stock keeps sinking. Shares closed at €8.29 on Friday, barely above the 52-week trough of €8.08, and have lost roughly 24% since the start of the year. The paradox is stark: a global expansion push that includes a newly defined Canadian quota and a record export month is doing little to shake off the bearish grip.

Canadian Quota Sets the Rules

The company is preparing its formal entry into Canada, where the government has imposed a strict annual cap on Chinese-made electric vehicles. From March 1, 2026, no more than 49,000 units can enter the country per year, with a tariff of just 6.1%. The quota grows slightly each year, but early movers will grab the slots. Geely’s Lotus brand expects to land the first batch as early as July, while BYD is still wading through the certification process. Stella Li, BYD’s vice president, dampened expectations, saying an official sales launch in Canada is unlikely before next year.

For now, the Canadian play is more about building a strategic footprint than adding immediate revenue. BYD is using the process to accumulate certification experience and set up dealer networks, hoping to eventually attract local supply-chain investment. But in the near term, Tesla, which already ships China-made cars into Canada, has the first-mover advantage.

Record Exports, Domestic Headwinds

While the Canadian story is still unfolding, the May sales numbers delivered a bright spot. BYD sold exactly 383,453 electric vehicles last month, a marginal 0.25% increase year-on-year, enough to reclaim the top spot in China’s auto market. Far more striking were the export figures: 160,644 units, a surge of 80.4% from a year earlier and a new corporate record. Overseas shipments are increasingly vital as a buffer against softness at home.

Yet the cumulative picture remains ugly. Over the first five months of 2026, total sales stood at roughly 1.4 million vehicles, trailing the prior-year period by about 20%. The price war in China continues to exact a heavy toll.

Profit Squeeze Deepens

Strong volume alone cannot reassure investors. In the first quarter, net profit plunged 55.4% to 4.1 billion yuan, the steepest decline since 2026. BYD’s discounting reached its highest level in years during March, eroding margins and shifting the focus from unit sales to profitability. The market now wants to see whether the export mix and margin discipline can offset the domestic price pressure.

Technically Oversold, Fundamentally Stuck

The charts tell a story of exhaustion. The relative strength index has fallen to 20.6, deep in oversold territory, and the stock is trading more than 23% below its 200-day moving average. But technical signals alone rarely reverse a downtrend when the fundamental backdrop is so cloudy. Investors are waiting for operating data, not chart patterns, to justify a turn.

What to Watch This Week

Tuesday brings two Chinese purchasing managers’ indices for manufacturing — the official NBS reading and the S&P Global PMI — both of which will shape demand expectations for vehicles, batteries, and export-oriented production. The Hong Kong exchange will be closed on Wednesday, July 1, for the SAR establishment day, shortening the trading week for local investors.

A constructive scenario for BYD shares would require three elements to align: stable June sales, sustained export momentum, and no negative surprises from the PMI data. If any of those pillars cracks, the oversold condition may not be enough to attract buyers. The June delivery figures will be the real test of whether May was a genuine turnaround or just a one-month aberration. Until then, the stock remains within striking distance of its 52-week floor at €8.08, and a break below that level could open the door to further selling.