BYD Sets Production and Storage Records but Profit Squeeze Keeps Stock in a Rut

BYD marks production milestones and a landmark Abu Dhabi battery storage contract, yet Q1 2026 net profit plunges 55% and shares are down 27% over 12 months.

BYD delivered a week of stark contrasts. The Chinese automaker rolled its 17 millionth new-energy vehicle off the line in Xi'an and inked one of the largest battery-storage deals ever signed — yet financial reports tell a story of shrinking margins, swelling inventories, and a stock that remains deep in the red for the year.

The equity posted a rare bounce on Friday, gaining 3.01% to close at €9.58. But that did little to alter the broader picture. The stock is down 12.55% year-to-date, and over twelve months the decline stands at nearly 27%. It trades 35.27% below its 52-week high of €14.80 set in July 2025 and sits beneath both its 50-day moving average of €9.76 and its 200-day line of €10.70. The 14-day relative strength index at 55.8 suggests neutral-to-slightly-bullish momentum after the rebound, while 30-day annualized volatility of 41.67% reflects persistent investor nervousness.

Desert Megadeal with Masdar

The day’s most striking headline came from BYD’s energy-storage division. It signed a contract with Emirati energy group Masdar to supply 11.275 GWh of storage capacity for the Round-the-Clock (RTC) project in Abu Dhabi. The facility, developed jointly with state utility EWEC, aims to be the world’s first gigawatt-scale renewable plant capable of delivering power 24/7.

BYD will deploy its Haohan storage system, featuring a new blade-type battery cell with a capacity of 2,710 ampere-hours — a more than 300% increase over the previous generation. The company claims the upgrade cuts battery-management complexity by up to 80%. The Masdar contract follows an earlier 12.5 GWh project in Saudi Arabia, cementing BYD’s push into the Middle Eastern storage market.

Record Production, Falling Profits

The 17-millionth vehicle — a Seal 08 sedan — rolled off BYD’s Xi’an assembly line on July 8, barely three months after the company announced the 16-millionth milestone. The record underscores rapidly accelerating output. Meanwhile, premium brand Denza, a BYD joint venture, filed data with the Chinese industry ministry for a new electric limousine, the Z9S, measuring 5,090 mm in length with a 3,025 mm wheelbase and peak motor power of 370 kW. A launch is expected later this year.

Yet the production fireworks contrast sharply with the numbers in BYD’s financial reports. For the full year 2025, net profit came in at 32.6 billion yuan, down 18.97% on sales of 4.6 million vehicles. In the first quarter of 2026, revenue fell 11.82% to 150.2 billion yuan. Net profit plunged 55.38% to just 4.085 billion yuan, while operating cash flow nearly halved to 59.14 billion yuan. Inventories ballooned to a record 160.4 billion yuan. More than four in ten dealers are now reportedly losing money. Chinese financial media attribute the sell-off to shrinking subsidies, intensifying price competition, currency losses, and a broad revaluation of the stock — which saw its P/E ratio collapse from around 249 to roughly 10.

Exports Are the Bright Spot

While the domestic market struggles, international operations are firing on all cylinders. Wholesale new-energy vehicle sales in June rose 5.46% year-on-year to 403,472 units, marking a second consecutive month of growth. Overseas deliveries hit a record 175,349 vehicles — a 94.73% surge from a year earlier and more than 43% of total June sales.

That export momentum helped BYD retake the global lead from Tesla in pure battery-electric vehicle sales during the second quarter. Tesla delivered 557,090 BEVs in the period, fewer than the year-ago quarter.

Europe Strategy Takes Shape — and Shifts

BYD is closing in on a second European production site. Alfredo Altavilla, the company’s special adviser for Europe, told a Reuters conference that two teams are scouting existing factories in different countries simultaneously, with Spain and France seen as the frontrunners. A decision is expected soon.

But plans for a factory in Turkey have been paused, according to vice president Stella Li. Instead, BYD is prioritising its greenfield plant in Szeged, Hungary, where vehicle assembly is scheduled to start in the fourth quarter of 2026. The second European site — likely an acquisition — would help BYD scale up local production and mitigate the impact of EU import tariffs on Chinese EVs, a challenge that increasingly shapes the sector’s expansion strategy.

For now, BYD’s narrative is split between operational milestones that defy gravity and financial metrics that keep the share price grounded. The storage deal, the export boom, and the production ramp are real — but so are the margin squeeze and the bearish chart. An answer to which story wins out may come with the final decision on the next European factory.