Ford’s Potential Battery Deal with BYD Sparks Market Interest

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Reports of advanced negotiations between Ford Motor Company and China's BYD over a potential battery supply agreement have captured investor attention. According to media sources, the discussions center on BYD providing batteries for Ford's hybrid vehicle models, a move seen as strategically significant for both automakers.

The market reacted favorably to the news. In Hong Kong trading, BYD shares (1211.HK) closed at HKD 99.10, marking a gain of 1.54% on a volume of 22.15 million shares. The stock opened at HKD 98.00 and reached an intraday high of HKD 100.10. On the Shenzhen exchange (002594.SZ), the equity advanced 1.92% to CNY 99.99. BYD's US-listed ADRs (BYDDF) also rose, closing at $12.91 for a daily increase of 3.69%.

Scope and Details of the Proposed Partnership

Citing a Wall Street Journal report, the talks involve a potential supply contract for batteries destined for specific Ford hybrid models. A key aspect of the arrangement is that Ford would import these battery cells from BYD for use in manufacturing facilities located outside the United States. Potential assembly sites under discussion are said to include plants in Germany, Spain, Thailand, and Turkey.

While negotiations are ongoing, no final agreement has been reached. Ford offered a reserved comment, stating it routinely holds discussions with numerous partners. BYD declined to provide a statement.

Strategic Rationale for Both Companies

For Ford, a potential agreement comes during a period of strategic recalibration. The US automaker announced in December 2025 that it would take a $19.5 billion write-down and has scaled back its plans for pure battery-electric vehicles. The company is now placing greater emphasis on hybrid and extended-range electric vehicles (EREVs) as more cost-effective pathways toward electrification.

For BYD, securing a deal with a major global OEM like Ford would represent a significant step in scaling its battery business beyond its own vehicle production. The company is China's second-largest traction battery supplier behind CATL. In November 2025, BYD held a 25.28% market share in the lithium iron phosphate (LFP) battery segment.

Existing Collaboration and Industry Context

The two companies are not new to working together. Their existing partnership in China includes several projects:
* The Changan Ford joint venture has been using BYD batteries since 2020.
* The Ford Mustang Mach-E sold in China is equipped with BYD's 811 ternary lithium batteries.
* The electric Bronco SUV launched in China in December 2025 utilizes BYD's Blade batteries in both EREV and pure BEV versions.

This established technical and operational relationship is likely to facilitate broader supply negotiations. The discussions fit a larger industry trend where Western manufacturers increasingly turn to Chinese battery suppliers to manage the high costs associated with electrification. According to SNE Research data, CATL and BYD collectively accounted for over 50% of global EV battery sales in 2025.

Political Headwinds and Expansion Plans

The prospect of a deal has already drawn political criticism in the United States. White House trade advisor Peter Navarro sharply criticized the reports on platform X, questioning why Ford would seek to make its supply chain dependent on a Chinese competitor.

This reaction underscores the ongoing technological rivalry between the US and China, particularly in electric vehicles and batteries. Ford is already under scrutiny for a battery project in Michigan that involves licensing technology from CATL.

Meanwhile, BYD continues to drive its international expansion. The company is targeting overseas sales of 1.5 to 1.6 million vehicles in 2026, following estimated sales of 900,000 to 1 million units outside China in 2025. To support this growth, BYD is constructing plants in Hungary and Brazil and is evaluating a potential third European manufacturing site in Spain.

Financial Outlook and Analyst Perspective

Market observers are now watching to see if the talks with Ford culminate in a formal contract. Such an agreement would further solidify BYD's standing as a global battery provider and validate its strategic focus beyond its own automotive manufacturing.

Financially, attention turns to the end of March when BYD is scheduled to release its full-year 2025 results. The current consensus points to earnings per share of CNY 3.93 and average expected revenue of CNY 851.26 billion. For 2026, estimates project an approximate 35% increase in EPS to CNY 5.31.

The average analyst price target for BYD's Hong Kong-listed shares is HKD 132.59, notably above the current trading level. Based on 2026 earnings estimates, BYD shares are currently trading at a forward P/E ratio of approximately 16.