Diverging Views Emerge on BYD’s Market Trajectory

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The beginning of 2026 presents a complex picture for Chinese electric vehicle titan BYD. Fresh off a year where it surpassed Tesla in global deliveries, the company now faces conflicting signals that have investors weighing near-term order weakness against the potential for a fundamental undervaluation of its business.

Recent industry data highlights a split market dynamic. China's vehicle exports surged by 21% in 2025, exceeding 7 million units. This robust international performance stands in stark contrast to conditions at home. Domestic passenger vehicle sales contracted by 18% in December, a downturn attributed to the expiration of government subsidies. BYD felt this shift directly, reporting an 18% year-on-year decline in December deliveries despite achieving an annual record of 4.6 million vehicles sold for the full year.

Citi Flags a Sharp Order Decline

Adding to concerns, a new analysis from Citigroup points to a "weak" start for the automaker in its crucial home market. The bank's research indicates that orders for new energy vehicles (NEVs) during the first eleven days of January fell significantly short of expectations. Citi now forecasts a month-over-month order drop of 25 to 35%, a steeper decline than previously anticipated.

While BYD successfully reduced its inventory to 1.2 months of sales by December's end, Citigroup analysts project this figure will rise again by late January due to the current order softness. Despite these short-term headwinds, the firm maintains its buy rating with a HK$174 price target, though it has meaningfully lowered its sales expectations for the current month.

Bernstein Highlights Hidden Value in Battery Division

Offering a counterpoint, research firm Bernstein published a study suggesting the market is materially mispricing BYD's stock. Their analysis contends that the company's battery business alone justifies nearly its entire market capitalization of approximately $121 billion.

This valuation implies the market currently assigns almost no value to BYD's core automotive operations, nor to its electronics and semiconductor divisions. Bernstein further emphasizes the company's solid financial footing, noting it holds more cash than debt and delivers a return on equity of 19%.

Strategic Focus for the Year Ahead

Management's strategy for 2026 is now clearly oriented toward international growth. BYD has set an ambitious target to increase its overseas sales to between 1.5 and 1.6 million vehicles this year. Domestically, the company is counting on model refreshes scheduled for the first quarter to help reignite demand. Investors will gain a clearer view of the financial impact when BYD releases its next quarterly report on March 23, 2026.