BYD's August Sales Test Arrives as Blade Battery Ramp-Up Becomes the Make-or-Break Variable

BYD's H1 net profit fell 20.5% to 12.3B yuan amid domestic price war and Blade Battery ramp-up, while overseas revenue surpassed 50% of sales for the first time.

The numbers tell a story of two companies. One is a global expansion machine, pushing overseas revenue past the halfway mark and locking in deals from Abu Dhabi to Shenzhen. The other is a domestic player squeezed by a brutal price war, watching its home-market sales crater by 31 percent. Both are BYD, and the tension between them comes to a head this week.

Hong Kong-listed shares in the automaker shed 3.6 percent on Monday following the release of first-half results showing net profit down 20.5 percent to 12.3 billion yuan. Group revenue slipped 7.1 percent to 344.8 billion yuan. The weekly decline now stands at 6.8 percent, with the stock off 11 percent since the start of the year. At its current level of 9.64 euros, the equity sits just below its 50-day moving average of 9.67 euros — a sideways drift that suggests investors have digested the earnings miss without settling on a direction.

Today's release of official August retail and wholesale figures offers the first concrete test of whether the nascent recovery can hold. July delivered a third consecutive month of growth, with 419,211 vehicles sold — a 21.76 percent year-on-year jump. Yet cumulative new-energy vehicle deliveries of 2.23 million units remain 10.5 percent below the prior-year level.

The Bottleneck at the Heart of the Miss

Chairman Wang Chuanfu has pointed to a single operational constraint to explain the shortfall: the production ramp-up of the second-generation Blade Battery. The battery is still in its early manufacturing scale-up phase, and until capacity catches up with demand, any sales recovery remains fragile — regardless of how quickly the overseas business expands.

That explanation carries weight because the second quarter showed genuine underlying momentum. Net profit climbed 30 percent to 8.2 billion yuan, snapping a streak of four consecutive quarterly declines. But the market had expected more: the consensus among Morgan Stanley, UBS, Citi, Deutsche Bank and CMBI called for a 48 percent profit surge, while revenue fell 3.2 percent to 194.6 billion yuan. The gap between delivery and expectation — driven by lower average selling prices, a direct symptom of the domestic price war — is what unsettled analysts.

The Export Engine Gathers Speed

The bullish case rests on international momentum that is difficult to argue with. Overseas revenue exceeded 50 percent of total sales for the first time in the first half, reaching 181.27 billion yuan — a 34 percent increase. Cumulative foreign deliveries jumped 71 percent to more than 790,000 vehicles, carrying a gross margin of 22 percent, up 1.9 percentage points year on year. Excluding currency effects, the core business grew 141 percent in the second quarter, pushing gross margin to an 18.9 percent annual high. Those figures prompted UOB Kay Hian to issue a buy recommendation with a target price of 135 Hong Kong dollars in early July.

The strategic calendar is equally active. BYD's energy storage division, which claimed the global number-one spot in the first half, signed a deal this week to supply 11.275 GWh to Masdar, the Abu Dhabi-based energy group. The company also plans to adapt the X-PACK battery technology from the Japanese microcar Racco for compact electric vehicles in Europe and Southeast Asia, positioning itself to benefit from new EU subsidy rules for small cars. At home, the 10,000th flash-charging station opened in Shenzhen — halfway to the 20,000 target set for year-end.

Competing Pressures on Multiple Fronts

The risks are equally concrete. The EU is reportedly examining new tariffs on Chinese plug-in hybrids — a segment where BYD overtook Tesla in Europe with 174,144 registrations in the first half. Tariffs could blunt precisely the export success story that is now carrying the investment thesis.

Meanwhile, the flagship plant under construction in Szeged, Hungary, faces fresh scrutiny. The new Hungarian government is reportedly reviewing state subsidies and alleged labour-rights violations among subcontractors. An investigation does not constitute a sanction, but it threatens to delay the timeline for establishing a European manufacturing base.

Competitive pressure is also building from Japan. Nissan and Honda announced plans to jointly develop standardised electronic control units for software-defined vehicles starting in fiscal 2029 — explicitly framed as a response to Chinese manufacturers' advance into Europe and Southeast Asia. The timeline is distant, but the signal is clear: BYD's most important growth markets will not be uncontested.

What August Will Reveal

The immediate question is whether August sales confirm the July trajectory. Continued growth would suggest the domestic price war is at least stabilising in volume terms. A faltering figure would elevate the Blade Battery bottleneck from a temporary constraint to a structural concern with implications for the quarters ahead.

The technical picture frames the stakes. The stock trades about 7.6 percent below its 200-day average of 10.43 euros, with the 52-week low at 8.03 euros. A smooth battery ramp-up combined with sustained export expansion keeps the case for gradual stabilisation intact. A stalling ramp-up, hardened EU tariff measures, or concrete action from the Hungarian investigation would likely keep the share price trapped between those two levels for the foreseeable future.

The August numbers, due today, will show which scenario is gaining ground.