BYD’s May Sales Turnaround Sparks Profit Catalyst as In-House Chip Targets Autonomy

BYD shares surge 6.6% after May wholesale volumes rise 19.4% month-on-month, breaking an eight-month sales slump. Citi upgrades outlook on record exports and new autonomous driving chip.

A sharp rally in BYD’s Hong Kong-listed shares on Tuesday reflected a sudden shift in sentiment: the market is betting that a long-awaited profit recovery is finally within reach. Citi placed the automaker on a 30-day “Positive Catalyst Watch” after May wholesale volumes of roughly 383,000 vehicles — up 19.4% from April and 0.3% year-on-year — broke an eight-month streak of declining sales. The bank estimates second-quarter net profit, stripping out foreign-exchange effects and BYD Electronic, at 10.3 billion to 12.4 billion yuan, well above the consensus range of 8 billion to 9 billion yuan.

The stock opened 3.14% higher at HK$93.60 and closed at HK$96.75, a daily gain of 6.61%. The move suggests investors are focusing on operational momentum rather than the year-to-date shortfall, where new-energy vehicle production through May fell 21.27% to 1.4109 million units and sales dropped 20.32% to 1.405 million vehicles.

Export Engine Drives the Comeback

The critical driver behind the May upturn was outside China. BYD exported 160,644 vehicles, a record that represented an 80.4% surge from the prior year and pushed international markets to account for 42% of total sales. The company’s first dedicated car carrier, the BYD Zhengzhou, recently delivered 4,809 vehicles to Melbourne, three-quarters of them already sold. Between April and June, the group aims to ship 30,000 units to Australia.

In Europe, BYD captured 2.2% of total passenger-car registrations across the EU, the UK and the European Free Trade Association in April — a figure that more than doubled year-on-year to 27,008 vehicles. The long-term plan calls for all Europe-bound EVs to be produced locally by 2028, a strategic hedge against tariff risks and brand competition. Meanwhile, in China, BYD’s wholesale NEV passenger-car estimate for May came in at 376,990 units, keeping it firmly at the top of a list that included Geely Auto (131,037), Chery (92,905) and Tesla China (85,982).

A 4-Nanometer Bet on Level 3 and Level 4

Beyond the sales turnaround, BYD is pushing deeper into proprietary technology. Late May saw the launch of the “Xuanji A3,” a self-developed 4-nanometer chip for autonomous driving that delivers 700 TOPS per unit. A triple-chip configuration exceeds 2,100 TOPS, enough for Level 3 and Level 4 functionality. Mass production has already started.

The automaker also introduced an “unlimited liability” guarantee for accidents involving its “God’s Eye” driver-assistance system, covering new customers and existing ones who upgrade to version 5.0. The policy lasts one year and signals confidence in the in-house technology while also reducing dependence on external suppliers.

Balance-Sheet Pressures and Analyst Confidence

Financial support from the state remains a factor. BYD received operating subsidies of 12.47 billion yuan (roughly $1.8 billion) in 2025, a sum some analysts flag as a risk to profitability should government backing taper off. A separate move to stabilise the supply chain — cutting payment terms to suppliers from 275–300 days to 60 days — could strain cash flow, even as it strengthens vendor relationships.

Analysts, however, remain broadly constructive. Investing.com compiles 28 price targets for the H-shares with a mean of HK$124.59 and a range of HK$93 to HK$148.64. CITIC Securities reiterated a “Buy” rating with a target of HK$130. The next catalyst comes on June 9, when the annual general meeting is scheduled to approve a final dividend for 2025. Whether the Citi profit call gains further traction will depend on June retail volumes sustaining their recent improvement and the export pipeline staying full.