The investment case for BYD is encountering significant pressure, with the automaker navigating a challenging confluence of softer sales, escalating costs, and intensifying competition. Following disappointing January delivery figures, the Hong Kong-listed stock is poised for a sixth consecutive weekly decline. Since May 2025, the company has shed over $60 billion in market capitalization.
A critical question now occupies investors: To what extent will rising input costs erode profit margins in the coming quarters?
A Disappointing Start to the Year
January delivery data revealed a notable slowdown for the Chinese automotive giant. Sales of battery electric vehicles (BEVs) fell to 83,249 units, marking the lowest monthly figure since February 2024. Total vehicle deliveries, which include plug-in hybrids (PHEVs), reached 205,518.
A deeper look shows domestic deliveries were particularly weak, dropping to 109,569 units—approximately half the level seen in the same period last year. The plug-in hybrid segment, which typically accounts for more than half of BYD’s total auto sales, also underperformed, with sales declining by 28.5% in January.
The market’s reaction was swift and severe. Earlier this week, BYD’s Hong Kong shares plunged 6.9% in a single session to HK$91, registering their largest one-day percentage drop since late May 2025.
Should investors sell immediately? Or is it worth buying BYD?
Sector-Wide Challenges Intensify
BYD’s struggles reflect broader headwinds buffeting China’s electric vehicle industry. Several major domestic EV brands reported substantial month-over-month delivery declines for January. Analysts point to a trio of primary factors: shifts in government policy, more expensive raw materials, and heightened competitive rivalry.
A key policy change took effect at the start of the year, as China reinstated a 5% purchase tax on new energy vehicles. These models had been exempt from the standard 10% levy for many years. Concurrently, crucial battery material costs have surged; lithium prices have more than doubled in just three months, while copper and aluminum have also seen appreciable increases.
The competitive landscape is also shifting. Geely reported January sales exceeding 270,000 vehicles, temporarily surpassing BYD as China’s top-selling automaker for the month.
Exports Provide a Silver Lining
Amid the domestic slowdown, BYD’s international business offers a stabilizing force. January exports jumped to 100,482 vehicles, a significant increase of 43.3% year-over-year. According to Reuters, the company is targeting 1.3 million overseas deliveries for 2026, which would represent a 24% increase from its 2025 goal.
All eyes now turn to the next key milestone. The upcoming quarterly results, expected to be released on March 23 following the company’s usual schedule, will provide crucial insight into how severely elevated raw material costs have impacted BYD’s profitability.
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