BYD's Xixian Battery Plant Hits Full Throttle as Washington Delays Connected-Vehicle Ban

BYD's 16 GWh Xixian cell plant reached full production as JPMorgan downgraded the stock to Neutral, cutting its target to 88 HKD from 124 HKD.

BYD's newest battery cell facility in Xixian, Shaanxi province, has reached full production, the company's Yicai-reported milestone arriving just as its shares came under pressure from a global bond-market selloff. The plant, built at a cost of 7 billion CNY, carries an annual capacity of 16 gigawatt-hours and ranks among the first sites manufacturing BYD's second-generation Blade battery. Bringing cell production in-house is central to the automaker's strategy of keeping manufacturing costs in check.

That operational progress, announced Wednesday, stood in contrast to the stock's performance. BYD shares finished Friday at 8.39 EUR on European trading venues, down 2.4% on the day, as surging US Treasury yields triggered a broad retreat across Asian equity markets. Several Chinese electric-vehicle makers, Li Auto and XPeng among them, fell in sympathy, though Geely managed to buck the trend.

JPMorgan Cuts Its Rating

Market sentiment was further dented by JPMorgan, which downgraded BYD from Overweight to Neutral and slashed its price target to 88 HKD from 124 HKD. The brokerage pointed to lackluster domestic demand, rising input costs, and persistent trade-policy and regulatory uncertainty facing Chinese carmakers. The downgrade was reported Wednesday, with some accounts placing the move a day earlier.

The cautious stance reflects a home market where consumers remain on the sidelines. According to Reuters, BYD continues to grapple with weak demand in China, where a bruising price war has made buyers hesitant. Investors in Hong Kong responded tepidly to the company's latest disclosures, with the local listing slipping after trading resumed Friday.

Exports Do the Heavy Lifting

September delivery figures, released Thursday, laid bare the split between home and abroad. Total vehicle sales climbed 17% year over year to 463,561 units, but the expansion was powered overwhelmingly by overseas markets: exports of passenger cars and pickups outside China jumped 153.9% to 179,877 units. Those booming shipments are doing much of the work of offsetting the sluggish domestic picture.

The overseas push, however, cuts both ways. It opens fresh sales channels while drawing Chinese manufacturers deeper into the crosshairs of foreign regulators and trade officials.

A Reprieve in Washington

On that front, the US Senate on Wednesday postponed deliberations on a bill that would permanently bar the import, production, and sale of connected vehicles and related hardware and software with Chinese links. The delay hands Chinese automakers, BYD included, a temporary breather from looming restrictions on access to the North American market.

For the year to date, unaudited company figures show total sales of 3,131,576 vehicles across the first nine months, a decline of 3.94% compared with the same period a year earlier. After the recent losses, the stock trades 4.5% above its 52-week low.

The picture for investors is one of a company pulled in two directions: an overseas expansion that is generating real momentum, set against trade-policy decisions in Washington and elsewhere that remain a significant wildcard for the business ahead.