---
endpoint: analytics
pattern: Autos
status: done
latency_ms: 307727
conversation_id: aa6f33df-767f-4e1f-9247-464a137a0f56
citations: 12
created: 2026-05-31 19:37:00Z
---

# Provide a one‑year narrative of BYD, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

## BYD (1211 HK / 002594 CH) — One-Year Narrative (Jun 2025 → May 2026)

### Setup — Spring 2025: A confident exporter sets a 10m bogey
Going into mid-2025, the analyst narrative on BYD was constructive but already hedging on China demand. After a CLSA corporate meeting in early May 2025, management reiterated a long-term sales target of **10 million units**, of which **roughly half would come from outside the China domestic market**, with intelligent driving (the "God's Eye" system) cascading into the mass-market range as costs fell [15]. Sell-side framed the equity story as scale-economy plus export ramp, with BYD's H-share already trading at a small premium to its A-share — the start of what CLSA termed a "new normal" for large-cap dual-listed Chinese champions [17]. The IR team conceded April orders were soft, blaming "tough market environment and targeted price cuts by competitors" [15].

### Late May 2025 — BYD fires the first shot of the 2025 price war
On **24–25 May 2025**, BYD announced an **additional Rmb10k–Rmb30k per-car discount** across its Ocean and Dynasty series — its iconic Qin Plus MSRP fell to **Rmb63.8k from Rmb79.8k** [13][14]. CLSA framed it as a defensive move: April volumes were ~1.36m YTD and weekly run-rates of **70k–80k implied monthly sales stuck near 400k vs the ~500k/month needed for the 5.5m annual target** [14]. The next week's order data confirmed the pressure — top-12 EV maker weekly orders fell **7% w/w (19–25 May)** — but BYD was still flagged as "better positioned given strong export momentum" [16]. Investors began to recalibrate: this was no longer a share-gain story, it was a margin-defence story, and the broader industry would have to follow.

### June 2025 — Destocking and the regulatory turn
By **25 June 2025**, Reuters reported BYD had cut production at several China factories. BYD pushed back, calling it a "production adjustment during the weak season," but CLSA noted the company's **monthly capacity of ~500k vs actual output of 300k–400k**, with destocking framed as positive for inventory normalisation [18]. Crucially, **dealer incentives announced at the dealer conference came in at Rmb700–800m, versus market expectations of Rmb1bn — flagged as a likely drag on 2Q profits** [18]. Beijing's **10 June policy on sustainable distribution supply chain** was a parallel signal that regulators wanted the price war contained [18]. The H1 narrative had pivoted from "scale wins" to "earnings quality at risk."

### Aug–Sep 2025 — The accident: a downward revision, a downgrade cycle, and Berkshire walks out
The H1 print landed badly. Per the early-September research roundup, BYD's **Q2 profit fell for the first time in over 3 years amid the China price war**, prompting a Jefferies downgrade [2]. Then on **4 September 2025**, Reuters reported BYD had quietly **cut its 2025 sales target from the original 5.5m to as low as 4.6m vehicles — a ~16% reduction — communicated internally and to suppliers in August** [1]. The stock was trading around **HK$106 / CNY ~100** at this point [1]. Two weeks later (**15 September**), **Founder Securities downgraded the A-share from Strong Recommend to Recommend** at CNY 106 [3], and on **21–22 September CNBC reported Berkshire Hathaway had fully sold out of its remaining BYD position** — a story powerful enough on its own to send the H-share down ~3% to HK$110.20 [4]. The combination of a guidance cut, the first profit decline in three years, and the most iconic long-term holder exiting reset the bull case.

### Oct–Dec 2025 — Production declines, regulatory action, and a geopolitical shoe
Operational data confirmed the de-rate. **November production came in at 474,175 units, down from 540,588 a year earlier — a ~12% y/y decline** [6], with the stock at CNY 95.77, near the year's lows [6]. Sentiment took a second hit on **26 November**, when the **Pentagon added BYD (alongside Alibaba) to its blacklist** [5] — re-pricing the long-term US/Western-market optionality investors had been crediting. Bottom-up data from China-listed corporates underscored the macro overhang: a **record share of Chinese companies posted net losses in Jan–Sep 2025** [8]. By **12 December**, China's **SAMR launched a public consultation on car-industry pricing practices** — Beijing's most explicit signal yet that the price war had become a regulatory concern, not just a competitive one [7]. The two-stroke message — softer demand, harder rules — made it difficult to make a clean cyclical-recovery call into 2026.

### Q1 2026 — Earnings miss confirms the deceleration
On **28 April 2026**, BYD reported **Q1 net income attributable of CNY 4.08bn versus a FactSet consensus of CNY 4.38bn (range CNY 3.54–5.22bn)** [9]. The stock was at CNY 101.48 — essentially flat over six months [9]. The miss was modest in dollar terms but symbolically important: even after a year of guidance resets, BYD still under-delivered on the lowered bar.

### Apr–May 2026 — The geopolitical squeeze tightens, and BYD pivots Europe
**April 2026 vehicle production: 322,298 units vs 385,064 a year earlier — down ~16% y/y** [10], extending the multi-quarter production decline. The price weakness paired with a fresh geopolitical hit: on **11 May 2026, US House lawmakers introduced a bill to ban Chinese vehicles in the US** [11]. Two days later, **Bloomberg reported BYD was in talks to buy underused factories from Stellantis and other European carmakers** [12] — a clear, capital-light pivot into European on-the-ground manufacturing to defuse tariff and political risk. The stock at **HK$98.15** on that report [12] was effectively back to where it had been before the September 2025 panic, but with a materially weaker fundamental backdrop and a more hostile geopolitical one.

### Synthesis — How the story shaped sentiment and valuation

| Phase | Sentiment driver | Valuation read-through |
|---|---|---|
| May–Jun 2025 | 10m long-term target, intelligent driving, export momentum [15][16] | H-share premium to A-share emerges — "new normal" for dual-listed champions [17] |
| Jun 2025 | Destocking, dealer incentives below expectation, June 10 policy [18] | Margin-defence story replaces share-gain story; profit quality questioned |
| Aug–Sep 2025 | First Q2 profit drop in 3+ years; 5.5m → 4.6m target cut; Jefferies/Founder downgrades; Berkshire fully exits [1][2][3][4] | Re-rating lower; the "Buffett premium" disappears; HK shares trade ~HK$106–110 |
| Nov–Dec 2025 | Pentagon blacklist; production -12% y/y; SAMR consultation; record Chinese loss-makers [5][6][7][8] | Geopolitical optionality discounted; cyclical recovery thesis pushed out; CNY shares slip to ~95 |
| Q1 2026 | Net income misses consensus (CNY 4.08bn vs 4.38bn) [9] | Even reset expectations not beaten; valuation stays compressed |
| Apr–May 2026 | April production -16% y/y; US House ban bill; Stellantis factory talks [10][11][12] | Stock around HK$98 — a year of bad news, but Europe pivot offers an escape valve |

### Key takeaway
BYD's one-year arc is a textbook case of **a dominant national champion forced to swap volume for margin under self-inflicted competitive pressure, then absorbing a second hit from regulation and geopolitics**. Investor sentiment moved through three identifiable phases — **scale optimism (spring 2025), price-war anxiety (summer 2025), and structural re-rating (fall 2025 onwards)** — with the Berkshire exit on **21 September 2025** as the symbolic turning point and the **Stellantis factory talks in May 2026** as the first credible offsetting catalyst. Through the full year, the stock essentially round-tripped while consensus earnings expectations and the long-term volume target were both materially reset lower, meaning the implied multiple actually expanded modestly on a now-lower earnings base — a sign that the market is partly pricing the Europe pivot, partly waiting for Beijing's pricing-discipline framework to bite.

---

**Sources**
[1] StreetAccount — BYD cuts 2025 sales target from 5.5M to as low as 4.6M (Reuters), 4-Sep-2025
[2] StreetAccount — ESG Research Round Up: Jefferies downgrades BYD after H1 (Q2 profit fell first time in 3+ years), 3-Sep-2025
[3] StreetAccount — BYD downgraded to Recommend from Strong Recommend at Founder Securities, 15-Sep-2025
[4] StreetAccount — Berkshire Hathaway has sold out of BYD Co. (CNBC), 22-Sep-2025
[5] StreetAccount — Pentagon adds Alibaba, BYD to blacklist, 26-Nov-2025
[6] StreetAccount — BYD reports November vehicle production volume 474,175 units vs 540,588 y/y, 1-Dec-2025
[7] StreetAccount — China SAMR launches public consultation on car industry pricing practices, 12-Dec-2025
[8] StreetAccount — Record share of Chinese companies post net losses in Jan-Sep, 27-Nov-2025
[9] StreetAccount — BYD reports Q1 net income attributable CNY4.08B vs FactSet CNY4.38B, 28-Apr-2026
[10] StreetAccount — BYD reports April vehicle production 322,298 units vs 385,064 y/y, 3-May-2026
[11] StreetAccount — House lawmakers introduce bill to ban Chinese vehicles in the US (Reuters), 11-May-2026
[12] StreetAccount — BYD in talks to buy underused factories from Stellantis, other European carmakers (Bloomberg), 13-May-2026
[13] BYD (Big price cuts coming again) — CLSA, 25-May-2025 — 607960444LinqAlpha.PDF
[14] BYD (Big price cuts coming again) — Apr sales / 5.5m target detail — CLSA, 25-May-2025 — 607960444LinqAlpha.PDF
[15] BYD (More contributions from overseas) — Corporate meeting, 10m target, exports — CLSA, 12-May-2025 — 607959021LinqAlpha.PDF
[16] China auto (Weak orders urge more price cuts) — Weekly orders -7%, BYD better positioned — CLSA, 27-May-2025 — 607960695LinqAlpha.PDF
[17] CATL — HC O-PF (A new normal?) — BYD H-share premium reference — CLSA, 25-May-2025 — 607960433LinqAlpha.PDF
[18] BYD (Destocking initiated) — Capacity 500k vs output 300–400k; dealer incentives Rmb700–800m — CLSA, 25-Jun-2025 — 607962811LinqAlpha.PDF

*Caveat on internal coverage vintage: CLSA's archive in this workspace runs through end-June 2025 (MAX(published_date) across the matched BYD-tagged set is 27-Jun-2025). The narrative from July 2025 onwards is grounded in public news (StreetAccount); no internal CLSA notes on BYD's H1 results, Berkshire exit, Pentagon blacklist, Q1 2026 earnings, or the Stellantis talks are available in the org's archive.*

## Citations

- [1] **BYD reduces this year's sales target to as low as 4.6M vehicles vs March target of 5.5M vehicles - Reuters** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4393052&_doc_date=2025-09-04&_doc_product=SA>
- [2] **StreetAccount ESG Research Round Up — Jefferies downgrades BYD after H1** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4392527&_doc_date=2025-09-03&_doc_product=SA>
- [3] **BYD Co. downgraded to recommend from strong recommend at Founder Securities** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4401478&_doc_date=2025-09-15&_doc_product=SA>
- [4] **Berkshire Hathaway has sold out of BYD Co. - CNBC, citing Berkshire spokesperson** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4406470&_doc_date=2025-09-22&_doc_product=SA>
- [5] **Pentagon adds Alibaba, BYD to blacklist; Novo seeks to fast track higher dose Wegovy approval in intraday themes** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4487900&_doc_date=2025-11-26&_doc_product=SA>
- [6] **BYD Co. reports November vehicle production volume 474,175 units vs year-ago 540,588 units** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4489839&_doc_date=2025-12-01&_doc_product=SA>
- [7] **China SAMR launches public consultation on car industry pricing practices** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4501302&_doc_date=2025-12-12&_doc_product=SA>
- [8] **Record share of Chinese companies post net losses in Jan-Sep** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4488686&_doc_date=2025-11-27&_doc_product=SA>
- [9] **BYD Co. reports Q1 net income attributable CNY4.08B vs FactSet CNY4.38B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4643854&_doc_date=2026-04-28&_doc_product=SA>
- [10] **BYD Co. reports April vehicle production volume 322,298 units vs year-ago 385,064 units** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4654848&_doc_date=2026-05-03&_doc_product=SA>
- [11] **House lawmakers introduce bill to ban Chinese vehicles in the US** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4673016&_doc_date=2026-05-11&_doc_product=SA>
- [12] **BYD in talks to buy underused factories from Stellantis, other European carmakers - Bloomberg** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4677220&_doc_date=2026-05-13&_doc_product=SA>

