BYD’s Export Engine Revs as Domestic Price War Deepens the Profit Squeeze

BYD's record EV sales and export surge can't lift stock down 34% from highs, as China price war slashes margins and Q1 profit plunges 55%.

BYD shipped more electric and hybrid vehicles in the first half of 2026 than any other global automaker, yet its stock languishes roughly 34% below last July’s record high. Shares changed hands at around €9.80 on Wednesday, up about 2% on the day, after data showed a sharp rebound in overseas deliveries. The rally has lifted the equity back above its 50-day moving average of €9.67, but it still trades almost 8% below the 200-day line of €10.66. For the year the stock is down roughly 10%, extending a 12-month slide that has wiped out nearly 28% of shareholder value.

The contradiction between volume and valuation sits at the heart of the market’s current view of BYD. The company produced its 17-millionth new-energy vehicle on July 8 and has overtaken Tesla in global battery-electric deliveries. June sales hit 403,472 units, a 5.5% year-on-year increase, bringing the second-quarter total to 1.1 million — a 58% sequential jump. Yet investors are no longer rewarding unit growth alone. They want proof that BYD can protect margins while it floods both its home market and an increasingly protectionist world with cars.

The export channel offers the clearest path to margin repair. International deliveries climbed more than 50% year-on-year in the first quarter, and in June BYD sold 175,349 vehicles outside China — a 95% surge that represented 43% of the month’s total volume. European sales rose 270% in 2025 to roughly 188,000 units and another 144% through May 2026. The company has set an internal target of 1.5 million overseas sales for the full year. “If BYD can localize production and maintain price competitiveness without sacrificing quality, global profitability will recover significantly over time,” said Bill Russo, founder of Automobility Limited. A new flagship SUV, the seven-seat Great Tang priced at 250,000 yuan, collected more than 30,000 orders on its first day, adding further momentum to the product pipeline.

But the home front tells a different story. China’s vehicle market remains mired in a brutal price war that has forced BYD into repeated discount rounds — reaching a two-year intensity peak in March. The toll is visible in the first-quarter financials: revenue fell 12% to 150.2 billion yuan, while net profit tumbled 55% to 4.08 billion yuan. The net margin narrowed from 5.4% to 2.7%. For the full year 2025, net profit dropped 19% to 32.6 billion yuan and the margin shrunk from 5.2% to 4.1%. Earnings per share slid from 4.61 to 3.58 yuan. The broader industry suffered an 18% profit decline in the first quarter, and average margins thinned to 3.2%. Even Xiaomi, despite strong delivery growth, loses roughly $5,600 on each vehicle sold.

BYD’s domestic sales have eroded alongside the profitability. In the first half of 2026 the group sold 1.81 million vehicles, a 15.7% decline from the same period a year earlier. China’s overall retail car sales fell 23.2% in June — the eighth consecutive monthly decline — even as the new-energy penetration rate climbed to 62.8%. BYD is capturing a larger share of a shrinking pie, which does little for the bottom line. Rivals such as NIO, Xpeng and Xiaomi continue to crank out tens of thousands of deliveries each month, keeping competitive pressure intense.

Overseas expansion comes with its own set of headaches. The European Union imposed tariffs on Chinese EVs in July 2024, adding roughly 17 percentage points to BYD’s base duty. The US rate of 100% remains a non-starter. The EU is now preparing countervailing duties on Chinese plug-in hybrids — the very segment BYD has used to circumvent the original tariff regime in Europe. The company’s planned €4 billion factory in Hungary is not expected to start meaningful production until the fourth quarter of 2026, and only in volumes of tens of thousands. Meanwhile, a $1 billion investment in Turkey has been suspended after local authorities revoked tax exemptions and threatened repayment demands if the delayed R&D and manufacturing project isn’t completed.

Wood Mackenzie has warned that China’s new-energy vehicle market will remain under pressure through the second quarter of 2026, citing reduced subsidies, compressed margins and volumes that are essentially flat against 2024 levels. Even if the export engine continues to hum, that domestic headwind may keep BYD’s earnings recovery in the slow lane.

The stock reflects the standoff. With annualized volatility above 40% and a relative-strength index near 59, the equity is neither oversold nor overbought — simply unsettled. The path forward hinges on whether monthly export volumes continue to climb toward the 1.5-million target, and whether that shift can reverse four consecutive quarters of falling profits. If the home-market price war escalates again, or if regulatory pushback spreads beyond Turkey and the EU, the deeper downtrend that keeps the stock 8% below its 200-day average will likely reassert itself. The next batch of data splitting domestic and export deliveries will provide the clearest signal yet on which narrative wins.