BYD Scours Europe for Idle Factories as Home Profits Tumble 55%

BYD pivots from building new plants to buying existing European facilities to avoid up to 35% EU tariffs, as domestic net profit plunges 55% and overseas sales become key growth driver.

The Chinese electric vehicle giant has shifted from building new plants to buying existing ones in Europe, a strategic pivot driven by the need to escape punishing EU tariffs while its domestic earnings take a hammering. Stella Li, BYD’s vice-president, confirmed the company is in direct talks with Stellantis and other carmakers, hunting for underused production sites such as the Cassino plant in Italy, which is running far below capacity. BYD wants full control — no joint ventures — and is also eyeing troubled legacy brands, describing Stellantis’ luxury label Maserati as “very interesting.”

The move marks a sharp departure from the company’s earlier greenfield approach. BYD is still pressing ahead with a multi-billion-dollar factory in Szeged, Hungary, due to open this year, and another in Turkey slated for 2027. But acquiring mothballed facilities offers a faster route to local assembly, allowing the group to sidestep European Union tariffs of up to 35 percent on Chinese-made EVs.

The urgency is underlined by a brutal squeeze in China. In the first quarter of 2026, net profit collapsed by 55 percent to 4.09 billion yuan. While global sales edged up month-on-month in April, the year-on-year trend showed an eighth consecutive decline. The home market is grappling with a hangover from Beijing halving EV tax breaks for 2026 and 2027, which pulled forward demand into earlier quarters.

Overseas sales have become the main growth engine. Exports hit a record roughly 135,000 vehicles in April. BYD now leads the UK’s EV sales rankings and last month overtook Volkswagen in overall sales in Brazil. JPMorgan expects international deliveries to account for around 60 percent of BYD’s vehicle revenue this year.

The bank rates the stock “Overweight” with a target of 120 Hong Kong dollars, citing management’s surprisingly upbeat forecasts. BYD aims to sell up to four million vehicles in China and 1.5 million abroad this year — a combined total above five million. Achieving that would require roughly four million deliveries in the months remaining, a steep acceleration.

Profitability is expected to get a lift from pricier models. Vehicles costing more than 200,000 yuan should represent over 30 percent of domestic sales by the fourth quarter of 2026, powered by new fast-charging technology. JPMorgan also predicts a sharp rebound in the second quarter, with sequential sales growth of around 60 percent.

At the close on Friday, BYD’s Hong Kong-listed shares stood at 96.45 Hong Kong dollars, near the chart support of 96.83 Hong Kong dollars. A concrete European factory deal could provide fresh momentum — and a much-needed buffer against the headwinds at home.