BYD's North American Strategy Takes Shape Ahead of Crucial Earnings

BYD's 2025 results, out Thursday, will test if its aggressive Canada entry and global sales can counter a sharp domestic slowdown and new purchase tax pressures.

The upcoming annual results for 2025 from Chinese electric vehicle (EV) manufacturer BYD will be closely scrutinized by investors this Thursday. The figures are expected to reveal whether the company's aggressive international push can offset a pronounced slowdown in its domestic market. This strategic pivot is gaining momentum with concrete plans for an entry into Canada, involving both a dealership network and a potential manufacturing facility.

Earnings Under Pressure from Home Market

The drive for overseas growth is born of necessity. In the first two months of 2026, BYD's sales in China contracted by approximately 36 percent. This decline is partly attributed to the reintroduction of a five percent purchase tax on electric cars at the end of 2025, which pulled demand forward and created a subsequent gap.

Analysts anticipate that the 2025 financial report will reflect these challenges. For the fourth quarter, projections point to a revenue decline of nearly 11 percent and lower earnings per share. Reflecting this uncertainty, expert price targets for the Hong Kong-listed shares show significant divergence:

• Average Price Target: 125.12 HKD
• Highest Estimate: 177.20 HKD
• Lowest Estimate: 80.38 HKD

Canada's New Tariff Policy Opens the Door

BYD's North American strategy is beginning with a focus on the Greater Toronto Area. According to industry consultants, the automaker aims to establish 20 dealerships in Canada within a year, with subsequent locations planned for Vancouver, Montreal, and Calgary.

This move is made feasible by a recent shift in Canadian import policy. The government has implemented a quota system that allows a set number of Chinese-made EVs to enter the country at a drastically reduced tariff rate of 6.1 percent, down from the previous 100 percent. While the initial annual quota of 49,000 vehicles is modest relative to the total market size, the new framework creates an economically viable entry point for BYD.

Beyond Sales: A Push for Local Production

The company's ambitions extend beyond simply selling imported vehicles. Vice President Stella Li confirmed that BYD is evaluating the construction of its own production plant in Canada. In doing so, she explicitly ruled out the joint-venture approach favored by officials in Ottawa. The firm insists on maintaining full control over its facilities to preserve its vertically integrated business model, which spans batteries and semiconductors.

To accelerate its expansion timeline, management has not excluded the possibility of acquiring a struggling traditional automaker. Establishing local production would also address a key sales barrier: currently, imported vehicles are ineligible for Canadian government purchase incentives of up to $5,000.

International Sales as the Counterweight

Thursday's annual report will provide investors with concrete data on the extent to which international sales are compensating for domestic weakness. A significant milestone was reached in February 2026, when overseas deliveries surpassed domestic sales for the first time, exceeding 100,600 units. For the ongoing 2026 fiscal year, management has set a definitive target of selling 1.3 million vehicles outside of China.