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Morgan Stanley expects BYD Co. to report second-quarter net profit of RMB9 billion ($1.2 billion), a sharp rebound from the first quarter's low base that could restore investor confidence after a year of earnings adjustments. "BYD is poised for a strong recovery in 2Q results, rebuilding market confidence and supporting a valuation re-rating in the second half and into 2027," the broker said in a report. Morgan Stanley maintained its Overweight rating on the Shenzhen-based automaker with an H-share target price of HKD121. The forecast implies vehicle sales of 1.1 million units for the quarter ended June, up 58% from the first quarter, underpinned by a 68% sequential jump in domestic deliveries and a 47% rise in overseas sales. Revenue is projected at RMB217 billion, up 45% quarter over quarter. For the full year, Morgan Stanley estimates BYD will sell 4.6 million vehicles, comprising 2.8 million domestic units and 1.8 million overseas units. Second-half sales are forecast at 2.8 million units, up 12% from a year earlier. The earnings recovery comes after a period of margin compression and competitive pressure in China's EV market. A strong 2Q print would signal that BYD's cost structure and pricing power remain intact despite intensifying competition from peers such as Geely and XPeng. The stock fell 3.4% on Thursday, with short selling accounting for 31.6% of turnover, reflecting lingering bearish positioning. A confirmed earnings beat could trigger a short squeeze and drive the stock toward Morgan Stanley's target, which implies roughly 20% upside from current levels. Investors will watch for BYD's official 2Q release, expected in late August, for actual margins and segment-level profitability. This article is for informational purposes only and does not constitute investment advice.
The EU's 17 percent countervailing duty on BYD has failed to slow the Chinese automaker's advance into Europe, White House senior trade adviser Peter Navarro said, urging Western governments to adopt far stronger measures to protect their domestic auto industries. "BYD is a pirate ship with a balance sheet, weakening both Europe's and America's industrial bases, one cheap EV at a time," Navarro wrote in a Politico Europe opinion piece published Thursday. BYD sold 4.6 million vehicles in 2025, including about 2.26 million pure battery-electric cars, far outpacing Tesla's roughly 1.6 million deliveries. The company is building its first European factory in Hungary and has received 20 billion forints ($63.7 million) in government assistance for a regional headquarters and research center there. The warning comes as traditional European automakers buckle under the pressure. Volkswagen plans to cut 35,000 German jobs by 2030 and is considering as many as 100,000 job cuts worldwide, while its China earnings have fallen more than 80 percent over the past decade. Mercedes, BMW and Porsche face similar pressure as the German premium model of engineering cars in-country and selling high-margin vehicles to China breaks down. **Europe's Divided Response** Only 10 of the EU's 27 member countries backed the final countervailing duties on Chinese EVs. Five voted against the measure and 12 abstained, exposing deep divisions within the bloc. Germany, home to Volkswagen, Mercedes, BMW, Audi and Porsche, voted against the tariffs because Beijing could retaliate across its broader export-dependent economy, which includes machinery, chemicals and industrial components. Other member states had their own reasons to hesitate. Hungary has become a landing zone for Chinese battery and EV investment. Spain and France want Chinese EV plants on their soil. Poland and the Czech Republic remain tied to German supply chains. The fractured response has allowed BYD and its Chinese peers to gain ground, Navarro argued. "Beijing acts. Brussels deliberates. And BYD drives through the gap," he wrote. **Massing on U.S. Borders** The U.S. is the only major auto market that has kept BYD out, Navarro said, but the company is now encircling it. Mexico imported more than 539,000 vehicles from China in 2025, making it Beijing's largest motor-vehicle export destination. In Canada, Geely's Lotus brand has already entered, while BYD and Chery are seeking approval under a low-tariff quota for Chinese EVs. Navarro described BYD's business model as "copy, absorb, subsidize, scale, dump and dominate." The company began as a battery maker in 1995 and now produces batteries, motors, electronics, power trains, semiconductors and components under one roof. Its breakout F3 model was a Toyota Corolla clone with Honda characteristics, he noted. The current average U.S. tariff on Chinese-made vehicles stands at 27.5 percent, combining the standard 2.5 percent passenger vehicle duty with a 25 percent Section 301 national security tariff imposed during the Trump administration. The previous escalation of tariffs on Chinese goods in 2018-2019 reduced bilateral trade by more than $100 billion over two years, according to Census Bureau data. The EU's 17 percent duty on BYD compares with 21 percent on Geely and 38 percent on SAIC, though the rates vary by company based on the level of cooperation with EU investigators. The European Commission is expected to review the measures within 12 months. This article is for informational purposes only and does not constitute investment advice.
Hungary's former Foreign Minister Péter Szijjártó resigned from parliament Wednesday to take a senior executive role at Chinese electric vehicle giant BYD, capping a decade-long relationship in which he helped steer hundreds of millions of dollars in state subsidies to the company while in office. Szijjártó, 47, said on Facebook he had accepted "a highly prestigious offer" from BYD and will serve as the executive responsible for the group's external relations and the development of new business lines. He served as Hungary's top diplomat for almost 12 years under former Prime Minister Viktor Orbán before the government lost April's election to Péter Magyar's pro-European Tisza party. "The only difference from before is that from now on, Péter Szijjártó will not be paid by the Hungarian people for the same work, but by his actual employer," Magyar wrote on social media, accusing the former minister of having "long represented foreign interests" and lobbying for "massive Hungarian state subsidies" for BYD. BYD is expected to begin assembling cars at its new factory in Szeged, southern Hungary, later this year — its first European production hub. Szijjártó played a central role in the 224 rounds of negotiations that brought the plant to Hungary in 2023, calling it "one of the largest investments in Hungarian economic history." The government provided undisclosed financial incentives for the factory, and in 2025 Szijjártó announced BYD would also locate its European headquarters and a research and development center in Budapest, receiving 20 billion forints ($63.7 million) in government assistance. **A decade of deepening China ties** Szijjártó's move is the latest sign of BYD's strategy to embed itself politically in Europe as it expands beyond China. The Shenzhen-based company, which surpassed Tesla as the world's top EV seller by volume, has prioritized Hungary as its gateway to the European Union, allowing it to bypass EU import tariffs on Chinese-made EVs that were imposed to protect the bloc's domestic auto industry. During his tenure, Szijjártó and Orbán opposed those tariffs, courted Chinese investment and opened a series of Chinese EV battery plants across Hungary. The government also jointly developed a rail corridor between Hungary and Serbia as part of China's Belt and Road Initiative. Szijjártó maintained similarly close ties with Moscow, frequently traveling to Russia after its full-scale invasion of Ukraine to negotiate oil and gas deals, and was awarded the Russian Order of Friendship by President Vladimir Putin in 2021. Szijjártó is not the only European politician making the leap into the automotive business. Former German Finance Minister Christian Lindner, who left politics after his party's election defeat, is set to become chief executive of Germany's largest car dealer, Autoland AG, in 2027. **What it means for BYD's European ambitions** BYD's hiring of a former foreign minister with deep government connections gives the company an insider who understands EU regulatory dynamics, tariff negotiations and subsidy structures — advantages that could prove decisive as European policymakers debate further trade measures against Chinese EV imports. The company's ability to leverage political relationships has been central to its rapid overseas expansion, and Szijjártó's appointment signals BYD intends to double down on that approach. For European automakers already struggling with BYD's cost advantage — its Blade battery using LFP chemistry is estimated at roughly $56 per kilowatt-hour, well below the industry average — the prospect of a politically connected BYD navigating EU trade barriers adds another layer of competitive pressure. BYD's European expansion comes as the company faces slowing domestic demand and intensifying price wars in China's EV market, where average selling prices have fallen by double-digit percentages over the past two years. This article is for informational purposes only and does not constitute investment advice.
**An aristocratic English estate became the battleground for China's most ambitious automotive challenge yet — BYD pitting its latest EVs against Ferrari, Lamborghini and Porsche in a documentary that signals how far the Shenzhen-based automaker has come from its battery-cell origins.** "China has moved from being a follower to a leader in EV technology, and that shift is now reaching the highest end of the market," said Tu Le, managing director at consultancy Sino Auto Insights. "European luxury brands can no longer assume their heritage alone will protect them." BYD sold 4.25 million passenger vehicles globally in 2025, up 42% from a year earlier, according to company filings. Its Denza and Yangwang sub-brands target price points above 300,000 yuan ($41,400), directly competing with entry-level offerings from BMW, Mercedes-Benz and Audi. The company's Blade battery, using lithium iron phosphate chemistry at an estimated $56 per kilowatt-hour — roughly half the industry average for nickel-manganese-cobalt packs — gives it a structural cost advantage that European rivals struggle to match. The competitive pressure is already reshaping the industry. Volkswagen Group, Europe's largest automaker, warned staff in a July memo that it faces a "theoretical loss" of 50,000 additional jobs on top of 50,000 already planned for Germany by 2030, bringing total potential cuts to 100,000. Chief Executive Oliver Blume told employees that VW's costs are 20% higher than key competitors, according to the memo reviewed by news.com.au. The group's operating profit plunged to €8.9 billion ($14.6 billion) in 2025 from €22.6 billion in 2023, while global sales fell to 4.7 million vehicles from 6.3 million in 2019. **China's price war hits home** China, once Volkswagen's most profitable market, has become its biggest liability. Sales there fell 26% in the first six months of 2026 as local manufacturers including BYD, Geely and Nio won over buyers with lower prices and faster EV technology cycles. The pain extends beyond China: VW's US sales slipped more than 7%, partly due to tariffs on imported vehicles, while Australian deliveries dropped to 28,970 in 2025 from more than 60,000 a decade ago. BYD's upmarket push comes as the broader Chinese EV market enters a consolidation phase. More than 20 brands have exited or been acquired since 2023, according to the China Passenger Car Association, as price competition squeezed margins across the industry. BYD's gross margin per vehicle held at roughly 20% in 2025, above the industry average but below the 25%-plus margins that Ferrari and Lamborghini command on each unit sold. The documentary, filmed at an undisclosed estate in England, shows BYD's Yangwang U8 — a plug-in hybrid SUV priced at 1.1 million yuan ($152,000) — competing against European supercars in acceleration and handling tests. The U8 can reach 100 kilometers per hour in 3.6 seconds, comparable to a Porsche Cayenne Turbo GT, according to BYD's published specifications. For investors, the question is whether BYD can replicate its mass-market success in the luxury segment without diluting margins. The company trades at roughly 18 times forward earnings, a discount to Ferrari's 35 times but a premium to Volkswagen's 5 times, reflecting the market's bet that BYD's growth trajectory will continue. Sino Auto Insights' Le said the real test will come when BYD launches a dedicated supercar platform, expected by late 2027, that could directly challenge Ferrari's core product lineup. This article is for informational purposes only and does not constitute investment advice.
BYD sold 4.5 million vehicles last year versus Toyota's 10.5 million, but the Chinese EV maker says it can close the gap within five years — without access to the US market. "We don't need the US market to achieve that," Stella Li, executive vice president and head of BYD's international operations, told the Financial Times, reinforcing founder Wang Chuanfu's target announced last month. BYD delivered 557,090 battery-electric vehicles in the second quarter, reclaiming the global EV sales lead from Tesla. Its European market share more than doubled to 2.8 percent in May, pushing it past Ford, Tesla and Nissan. The company sold about 4.5 million vehicles last year across all powertrains, compared with Toyota's 10.5 million. BYD's US-listed shares rose 3 percent to $10.98 on Tuesday following the comments, though they remain down 29 percent over the past year. Tesla shares gained 25 percent in the same period, while Toyota added 4 percent. The gap in scale is substantial — Toyota's lead is supported by strong US sales and a broad lineup spanning gasoline, hybrid and electric vehicles — but BYD is betting on rapid overseas expansion and charging technology to close it. ## Europe, Not America, Drives the Ambition BYD remains largely excluded from the US passenger-car market because of tariffs and restrictions on Chinese automotive software. Li said the company has no plans to acquire a rival to gain entry, though she remained "open-minded" about buying a premium European brand. Renault reportedly rejected an approach from BYD last year. With China's domestic auto market caught in a brutal price war that has squeezed margins across the industry, BYD is leaning heavily on overseas growth. Europe is especially attractive because the company can earn higher margins there than in its home market. China's monthly vehicle exports reached a record 1 million units in June, highlighting the broader push by Chinese automakers into global markets. BYD is also expanding across Southeast Asia and Latin America, building factories in Thailand, Brazil, Hungary and Indonesia to localize production and avoid import tariffs. The company's overseas sales accounted for about 10 percent of total deliveries last year, a share it aims to grow significantly. ## Charging Tech and Premium Ambitions BYD is investing in its own premium brand, Denza, to challenge established German manufacturers such as Mercedes-Benz and BMW. The company recently unveiled the Denza Z electric supercar, priced from £142,900 in the UK, and plans to spend nearly €2 billion installing 3,000 "flash" chargers across Europe by 2027. BYD says the technology can charge compatible Denza models to 70 percent in five minutes — faster than Tesla's Supercharger network. "Just wait one more year and you'll say we can do this successfully," Li said. BYD shares listed in Hong Kong rose 0.9 percent on Wednesday. The company's aggressive growth narrative could boost investor confidence in BYD (01211.HK) and related EV supply chain stocks, while the explicit downplaying of US market reliance may reduce perceived geopolitical risk for investors. For Toyota, the threat remains distant but credible — BYD's rapid ascent in Europe and its charging infrastructure bet suggest the five-year timeline, while ambitious, is not without foundation. *This article is for informational purposes only and does not constitute investment advice.*
JPMorgan cut GAC Group to Underweight from Neutral and lowered its price target to HKD1.1 from HKD3.3, as the bank forecast no meaningful recovery in China's auto market for the second half of 2026. "The defensive nature of the company's revenue insulates the consumer finance provider from the energy shock," the analysts wrote in a note dated July 13. The bank also downgraded SAIC Motor to Underweight from Neutral, citing expectations that weak performance at both automakers will persist. China's domestic passenger vehicle demand fell 23% year-over-year in the first half, and JPMorgan expects the decline to narrow to about 10% in the second half as consumer confidence remains weak. New energy vehicle penetration hit a record 63% in June, creating a sharp divide between automakers with competitive EV lineups and those without. The bank's top picks for the second half are Geely Auto, NIO-SW and BYD Company, all rated Overweight. JPMorgan said NIO's second-quarter results are likely to beat expectations, while Geely is also positioned for better-than-forecast performance. BYD's target price stays at HKD124. In overseas markets, JPMorgan said sales targets set by major Chinese automakers are too conservative, with actual performance potentially exceeding targets by 20% to 50%. Overseas markets are expected to account for 30% to 50% of revenue for major Chinese auto companies in 2026, providing a buffer against weak domestic demand. The bank lowered price targets for several other automakers to reflect weaker mainland conditions and cost pressures. XPeng-W was maintained at Overweight with a target cut to HKD108 from HKD118. Leapmotor was kept at Overweight with a target reduced to HKD60 from HKD90. Li Auto was maintained at Underweight with a target slashed to HKD38 from HKD56. Great Wall Motor was held at Neutral with a target lowered to HKD8.5 from HKD11.5. BAIC Motor stayed at Neutral with a target cut to HKD0.8 from HKD1.6. Changan Automobile remained at Underweight with a target reduced to RMB4.5 from RMB6.6. The divergence between weak domestic demand and strong overseas growth creates a clear winner set. Investors should focus on automakers with room for earnings upgrades, strong NEV product portfolios and higher overseas revenue exposure, JPMorgan said. The bank's next sector update will likely follow second-half delivery data from major Chinese automakers. This article is for informational purposes only and does not constitute investment advice.
China's new energy vehicle exports surged to a record 499,000 units in June, jumping 152.7% from a year earlier as automakers from BYD to Tesla accelerated overseas shipments to offset persistent weakness in domestic demand. "Chinese automakers are aggressively expanding export capacity as the domestic market remains highly competitive," the China Passenger Car Association said in its monthly data release on July 8. The data covers both pure battery-electric and plug-in hybrid vehicles shipped abroad. BYD Co. remained the dominant exporter with 170,897 vehicles shipped in June, more than double the total of second-ranked Chery Automobile at 73,819 units. Geely Automobile Holdings followed with 61,550, while Tesla Inc.'s Shanghai factory exported 36,171 vehicles. Other notable exporters included SAIC Motor Corp. at 30,581 units, Leapmotor at 21,000, Dongfeng Motor Group at 15,680, Changan Automobile at 15,061, SAIC-GM-Wuling at 12,953 and Great Wall Motor Co. at 10,469. The export surge shows how Chinese EV makers are increasingly relying on international markets to absorb production capacity as price competition at home erodes margins. BYD alone exported 792,256 vehicles in the first half of 2026, accounting for 43.8% of its total NEV sales, while its domestic sales fell 39.6% year over year. With global EV adoption accelerating and trade tensions rising, the ability to sustain this export momentum will be a key determinant of profitability for Chinese automakers in the second half of the year. The June data extends a trend of accelerating export growth. In the first half of 2026, China's total NEV exports likely exceeded 2 million units based on the monthly run rate, cementing the country's position as the world's largest EV exporter. The 152.7% year-over-year growth rate in June compares with a 17.6% month-over-month increase, indicating that the acceleration is broad-based rather than seasonal. The 17.6% month-over-month gain follows a 12.3% increase in May, suggesting export momentum is building as new shipping capacity comes online and overseas dealer networks expand. For Tesla, the 36,171 units exported from its Shanghai Gigafactory represent a meaningful portion of its global delivery footprint. The US automaker faces intensifying competition from BYD in markets across Southeast Asia, Europe and Australia, where the Chinese automaker's lower-cost models have gained significant market share. BYD's overseas deliveries hit a record 175,349 vehicles in June alone, according to the company's monthly sales report. The export data also shows a shifting competitive hierarchy. Leapmotor, the Stellantis-backed startup, shipped 21,000 units in June, surpassing established players including Dongfeng and Changan. The company's push into European markets through Stellantis's distribution network has helped it gain traction without building its own overseas infrastructure. Great Wall Motor, by contrast, exported just 10,469 units, reflecting its slower pivot to EV production compared with domestic rivals. The export boom also benefits the broader EV supply chain. Battery makers including Contemporary Amperex Technology Co. Ltd. and CALB Group Co. are expanding production capacity overseas alongside automakers, while lithium processors in China are seeing sustained demand from export-oriented EV production. For investors, the divergence between BYD's export growth of 94.7% in June and its 22% domestic sales decline illustrates the extent to which Chinese automakers now depend on international markets for growth. This article is for informational purposes only and does not constitute investment advice.
UOB Kay Hian raised its price target on BYD Co. to HKD135 from HKD120 while cutting targets for Geely Automobile Holdings and Great Wall Motor Co., as mixed June sales among China's five largest automakers showed export strength offsetting persistent domestic weakness. "BYD and Geely outperformed peers on the back of overseas sales and electric vehicle performance, while GWM and Li Auto posted weaker-than-expected sales due to domestic pressure and model replacement cycles," the broker said in a July 3 report. BYD, the broker's top Buy pick alongside Contemporary Amperex Technology, Geely, Minth Group and Ganfeng Lithium, saw June sales rise 5.5% from a year earlier to 403,472 vehicles, with overseas deliveries surging 94.7% to 175,349 units. That helped cushion a 22% decline in China sales. Geely also benefited from strong EV exports, while GWM and Li Auto struggled with model transition cycles and intensifying price competition in the domestic market. The revisions reflect diverging fortunes among Chinese automakers as export momentum becomes the key differentiator. BYD Chairman Wang Chuanfu said last month the company aims to become the world's largest automaker within five years, pointing to export growth and battery technology advances. Li Auto, rated the sector's top Sell with a HKD40 target implying about 15% downside, faces headwinds from its model refresh cycle and domestic competition. The broker maintained an Equalweight rating on the sector, signaling selective opportunities rather than broad-based recovery. For BYD holders, the raised target signals confidence in overseas expansion as a buffer against China's weak demand. Investors will watch the company's second-quarter earnings for updates on export margins and the timeline for its second European plant. For Li Auto, the Sell rating puts focus on whether its refreshed L series can reverse the sales trajectory in the second half. This article is for informational purposes only and does not constitute investment advice.
**BYD's growth story has flipped: overseas markets now carry the weight that China's domestic market once shouldered alone.** BYD sold 403,472 new energy vehicles in June, up 5.5% from a year earlier, but the headline number masks a structural shift. Overseas deliveries hit a record 175,349 units, accounting for roughly 43.5% of the monthly total, while domestic volume retreated to about 228,000 units, according to company data released July 1. "BYD's export strategy is effectively improving their average selling price by thousands of yuan per unit," JPMorgan analysts wrote in a note, estimating that higher-margin overseas sales are stabilizing the company's financial outlook amid a brutal domestic price war. The June export record followed May's then-record of 160,644 units and marked the second straight month overseas share exceeded 40%. For the first half of 2026, BYD sold about 791,000 vehicles outside China, representing roughly 43.8% of total volume and putting the company 52.7% of the way toward its raised full-year target of 1.5 million overseas units. Domestic sales over the same period came to about 1.02 million units, a derived figure that underscores how far the home market has fallen from its 2025 pace as subsidy tapering and margin compression take hold. The shift matters because overseas markets offer structurally higher margins than China's ultra-competitive arena, where BYD's net profit fell 55% year-over-year to 4.08 billion yuan in the first quarter — its lowest in more than three years. Chairman Wang Chuanfu has described domestic competition as having reached a "fever pitch" and a "knockout stage," and the company's full-year guidance of 5.0 million to 5.5 million NEVs implies a second-half average of 532,000 to 615,000 units per month, more than double the 301,000 monthly pace of the first half. **The Export Engine and Its Limits** BYD's overseas push is broad-based but concentrated. Southeast Asia has become a stronghold, with Chinese brands accounting for 88% of EV sales in Thailand over the past year. In Europe, BYD has outsold Tesla for multiple consecutive months, including in Germany, where year-to-date registrations surged nearly 400% through April. The company's first European passenger vehicle factory in Szeged, Hungary, began trial production in January and is ramping toward series production, allowing BYD to sidestep EU import tariffs. Latin America and the Middle East are also contributing. In Brazil and Mexico, BYD's affordable models — the Seagull (priced from about $10,000) and the Dolphin — provide an entry point to electric mobility that legacy automakers cannot match on price. A surprise trade deal in June cut Canada's tariff on Chinese-built EVs to 6.1% from 100%, opening a new North American corridor. But the export strategy carries risks. BYD's overseas sales target of 1.5 million units for 2026, raised from an initial 1.3 million, requires the company to simultaneously scale logistics, local factory production, dealer networks, and after-sales service across multiple continents. Any bottleneck — from shipping capacity to regulatory compliance to local service quality — could turn the overseas growth story into a cost problem. **The Domestic Math Gets Harder** BYD's domestic business remains the world's largest NEV operation by volume, but it is no longer the growth driver. The company's traditional stronghold — the 100,000-to-200,000 yuan ($13,800-$27,600) price band — is the most contested segment in China's auto market, with Geely, Changan, Chery, Leapmotor, and XPeng all accelerating their NEV product cadence. Joint-venture brands are also fighting back with lower prices and Chinese supply chains. The product mix is shifting in response. Plug-in hybrids rose 14.7% year-over-year in June to 195,820 units, while pure battery-electric vehicles fell 2.6% to 201,472 units. The premium push is also underway: the Datang, BYD's first D-segment flagship SUV, surpassed 100,000 pre-orders at a price range of 250,000 to 320,000 yuan, pairing a second-generation Blade Battery with a 1,000-volt architecture. **What It Means for Investors** BYD's valuation increasingly depends on its ability to execute globally. The company trades at roughly 18x forward earnings, a discount to Tesla's 35x, reflecting the market's skepticism about whether BYD can replicate its Chinese cost advantages in foreign markets. The Hungary factory ramp, the Canadian entry timeline, and the trajectory of overseas margins will be the key metrics to watch in the second half. Wang Chuanfu has set a target of making BYD the world's largest automaker by volume within five years. That ambition now rests less on China's market share and more on whether BYD can transform from China's most efficient price competitor into a genuinely global automaker — a transition that no Chinese car company has yet completed. This article is for informational purposes only and does not constitute investment advice.
BYD's in-house Xuanji A3 chip, built on a 4nm process with 700-plus TOPS per unit, will debut in a Denza production model in 2027, challenging Nvidia's dominance in China's smart driving market. "A smart driving chip typically needs at least a year to go from tape-out to deployment in a vehicle," an employee of an ADAS solution provider that develops its own chips said, as reported by LatePost. "The chip itself, algorithm deployment, and whole-vehicle adaptation must all be verified individually, making it difficult to sharply shorten the commercialization timeline." The Xuanji A3, unveiled May 28, is China's first smart driving chip built on a 4nm process. A single chip delivers more than 700 TOPS of computing power, while three chips working together provide a combined total of over 2,100 TOPS, supporting L3 and L4 autonomous driving. BYD said the chip consumes 20% less power per unit of computing power than comparable products, and its computing power utilization improved by 100% after optimization with in-house algorithms. Developing proprietary chips is becoming a key strategy for Chinese EV makers to build a moat in the AI era. Nio, Xpeng and Li Auto have all launched their own smart driving chips in mass-produced vehicles. BYD's chip R&D team now exceeds 7,000 people, with four R&D bases and five wafer fabs, and cumulative semiconductor R&D investment has surpassed 100 billion yuan ($14.71 billion). BYD has been working on chips for more than two decades. The company set up its integrated circuit design department in 2002, the predecessor of BYD Semiconductor. In 2008, it acquired Ningbo Zhongwei Semiconductor, entering the IGBT field, and has since achieved self-development and self-production in power semiconductors, MCUs and power management. Still, vertical integration in intelligence is far more complex than in electrification, LatePost noted. Power semiconductors mainly serve electric drive and energy conversion, while ADAS chips must evolve in tandem with algorithm models, sensor solutions and domain controllers. This complexity is one reason BYD moved its driving chip business into its new technology institute in the first half of 2024, integrating two smart driving teams. Beyond self-development, BYD has long used external solutions. Suppliers for its God's Eye smart driving system include Momenta and Huawei. When God's Eye was launched last February, BYD's driving engineers already exceeded 5,000. BYD shares trade at about 21 times forward earnings. The in-house chip strategy could reduce BYD's reliance on third-party suppliers such as Nvidia and Qualcomm for smart driving compute, potentially saving hundreds of millions of dollars annually in procurement costs as the company scales autonomous driving across its brands. The 2027 timeline provides medium-term catalyst visibility, though the chip's real-world performance against Nvidia's Drive Thor platform — expected to deliver 2,000 TOPS on a single chip — remains unverified. This article is for informational purposes only and does not constitute investment advice.
**Five Chinese central government ministries kicked off the 2026 edition of the "New Energy Vehicles Going to the Countryside" campaign on June 25, signaling Beijing's push to expand EV adoption beyond major cities into rural China.** The Ministry of Industry and Information Technology, Ministry of Commerce, National Development and Reform Commission, Ministry of Agriculture and Rural Affairs, and National Energy Administration launched the campaign simultaneously in Tacheng, Xinjiang and Chengmai, Hainan — two regions that underscore the program's geographic ambition. "Rural markets represent the next growth frontier for China's new energy vehicle industry, with penetration rates still below 20% in many counties compared to over 40% in tier-1 cities," a MIIT official said at the Tacheng launch event. The 2026 campaign builds on previous editions that have helped drive NEV sales in rural areas. China produced 1.296 million new energy vehicles in Chongqing alone in 2025, accounting for about 46.5% of the city's total automobile output, according to local government data. The New International Land-Sea Trade Corridor, which links inland China to ASEAN markets, moved 120 million tonnes of cargo through national logistics hubs in 2025, up 13% year on year — a logistics backbone that supports distribution of vehicles to rural dealerships. The multi-ministerial approach — spanning industry, commerce, agriculture, and energy — reflects the campaign's scope. Beyond vehicle sales, the program typically includes subsidies for charging infrastructure installation in rural areas, trade-in incentives for older gasoline vehicles, and financing support for agricultural cooperatives and small businesses. The NEA's involvement points to continued investment in rural charging networks, a key barrier to adoption in less developed regions. **Who wins, who loses** BYD Co., which dominates China's NEV market with a roughly 33% share according to the China Passenger Car Association, stands as the primary beneficiary. The company's low-cost models — including the Seagull, priced from about $9,700 (70,000 yuan) — are well-suited for rural price sensitivity. SAIC Motor Corp. and Geely Automobile Holdings Ltd., both with extensive distribution networks in lower-tier cities, also stand to gain. NIO Inc., focused on premium EVs with battery-swapping technology, may see less direct benefit unless it introduces more affordable models for the campaign. For global automakers, the campaign widens the competitive gap. Foreign brands held less than 5% of China's NEV market in 2025, CPCA data shows, and rural distribution remains a structural disadvantage against domestic players with deeper local networks. The campaign also supports China's broader rural modernization agenda. President Xi Jinping, during a June 24 inspection in Dezhou, Shandong, called for advancing agricultural and rural modernization, emphasizing the need to ensure stable grain supplies and build livable villages. The NEV campaign aligns with that vision by promoting cleaner transportation in areas where agricultural logistics and personal mobility increasingly overlap. BYD shares traded at around 260 yuan in Shenzhen on June 25, up about 18% year to date. The stock trades at roughly 22 times forward earnings, below its five-year average of 28 times, suggesting the market has yet to fully price in rural expansion. If the 2026 campaign drives a 15% to 20% increase in rural NEV sales — in line with the impact of prior editions — analysts estimate it could add 3 billion yuan to 5 billion yuan in aggregate revenue for participating automakers in the second half of the year. *This article is for informational purposes only and does not constitute investment advice.*
**Chinese stocks are down 11% this year, but a handful of companies tied to AI infrastructure, energy security, and industrial automation are drawing fund managers back to a market trading at half its 2020 valuation.** China's MSCI index has fallen 11% year-to-date to about 12 times forward earnings, roughly half its 2020 valuation, as weak consumer spending and US trade restrictions keep investors on the sidelines. "There's value. It's probably a good time to think about it," said Alison Shimada, head of Total Emerging Markets Equity at Allspring Global Investments. Retail sales turned negative in May for the first time since December 2022, and bank loan growth fell to 5.5% year-over-year, its lowest since 2001. Meanwhile, South Korea and Taiwan have surged 122% and 73% respectively on the AI chip boom, pushing China from 40% of the MSCI Emerging Markets index in 2020 to 20% today — now ranked third behind both markets. Fund managers are bypassing internet giants Alibaba and Tencent in favor of companies tied to Beijing's self-reliance push and AI infrastructure buildout, including BYD, CATL, Zhongji Innolight, Midea, and Montage Technology — names that trade at single-digit to low-teens earnings multiples despite exposure to China's fastest-growing industrial segments. ## AI and Energy Security Drive Demand China's push for self-reliance in semiconductors and AI hardware is creating opportunities beyond the well-known tech names. Vivian Lin Thurston, manager of the William Blair Emerging Markets Growth fund, described China as "the only country in the world that has the entire AI ecosystem from beginning to end" after returning from a visit. Optical networking company Zhongji Innolight and chip designer Montage Technology — which sells to Samsung Electronics and SK Hynix — are among the beneficiaries. Ben Durrant, a manager at Baillie Gifford's new Emerging Markets ETF, said Montage could grow into a company as large as Broadcom over the next decade. Energy security is another structural driver. China's success in diversifying into renewables, nuclear, and coal helped it weather the Iran war better than South Korea and other nations more dependent on Middle East oil, said Rohit Chopra, manager of the Lazard Emerging Markets Equity fund. That push should sustain demand for CATL and BYD, both of which he owns. ## BYD's Industrial Battery Business Offers Hidden Value BYD stock has fallen 36% since May 2025 as domestic price wars squeezed its EV margins. Yet the company has become the best-selling global EV brand through lower-cost, high-range models, with roughly half of sales now coming from overseas. A factory under construction in Hungary will allow tariff-free sales into Europe. Chopra said investors may be underestimating BYD's industrial-scale battery systems business, which is generating strong demand from the AI data center buildout. That segment could eventually account for a third of overall revenue, up from an estimated 5% today. At 13 times estimated 2027 profits, BYD trades at a discount to most global automakers. Midea, best known for home appliances, now generates a quarter of sales from robotics, factory automation, and data-center cooling. Durrant called the stock a "cheap rarity" at 12 times earnings, delivering free cash flow compounding at 10% annually with a 4% dividend yield. ## Risks Remain Despite Compelling Valuations Geopolitical headwinds persist. The US Defense Department recently blacklisted dozens of Chinese companies including Alibaba, Baidu, and BYD, barring them from doing business with the US military — a largely symbolic move that nonetheless prompted Beijing to retaliate with trade restrictions on US rare earth producers. Domestic competition remains fierce, and Beijing has increased scrutiny of its private-fund industry to rein in IPO hype in Hong Kong. Still, Nicholas Borst, director of China research at Seafarer Funds, said companies he met with on a recent trip were the most relaxed he had ever seen about government policy. "Market regulators are doing some things on competition and there are policies where national security is an imperative, like AI and financial stability. But in general the feel was for a loosening and more relaxed policy environment," Borst said. For investors willing to look past the macro headwinds, China's A-share market offers exposure to AI and industrial megatrends at valuations that are hard to find elsewhere. ETFs such as the Xtrackers Harvest CSI 300 China A-Shares ETF and the Rayliant-ChinaAMC Transformative China Tech ETF provide access to these themes without the complexity of buying individual mainland-listed stocks. This article is for informational purposes only and does not constitute investment advice.
**China's electric-vehicle makers have lost billions in market value this year as intensifying competition and slowing demand erode investor confidence.** China EV stocks extended their slide Monday, with Nio falling to $5 — down 30% from its May high and the lowest since March 9 — as persistent concerns over growth prospects and a brutal price war weighed on the sector. "Investors remain pessimistic about growth prospects for China's EV sector," the Invezz report said, citing persistent headwinds from oversupply, margin compression and intensifying competition from domestic rivals. The selloff swept across the sector, dragging down XPeng, Li Auto, BYD and Polestar. BYD, which delivered more than 2.2 million EVs last year and outsold Tesla directly, faces its own growth challenges in 2026 after a sluggish start to the year. Geely Automotive Group added further competitive pressure, with New Energy Vehicle sales surging 90% to almost 1.7 million units in 2025, and the company planning aggressive expansion into Europe — one of Tesla's biggest markets. The sector-wide decline threatens to accelerate capital outflows from China EV names, potentially triggering valuation downgrades and increased scrutiny on upcoming earnings reports. Tesla, which reports second-quarter deliveries on July 2, is expected to deliver about 400,000 vehicles — a figure that would mark its second straight quarter of growth but still leave it trailing BYD in the affordable segment. **Price War Intensifies as Margins Shrink** China's EV market has become increasingly crowded. BYD dominates the affordable end with prices Tesla cannot match, while Geely's rapid expansion into Europe threatens to erode market share for established players. Nio, which targets the premium segment, has struggled to maintain momentum as the price war compressed margins across the industry. Tesla's automotive revenue fell 10% in 2025, and its earnings dropped 47% as it aggressively cut prices to attract customers. The company's first-quarter 2026 deliveries of 358,023 vehicles represented a 6% increase from a year earlier, offering a recovery signal after two consecutive years of declining sales. **What Comes Next for China EV Stocks** The next catalyst for the sector comes July 2, when Tesla reports second-quarter deliveries. Wall Street's consensus estimate of about 400,000 vehicles would represent a 4% year-over-year increase. A strong number could provide a temporary lift, but structural challenges — oversupply, margin pressure and intensifying competition — are likely to persist. Nio's next earnings report will be closely watched for signs of stabilization in deliveries and average selling prices. Tesla trades at a price-to-earnings ratio of 366, more than 10 times the Nasdaq-100's 34.4, leaving it vulnerable to sharp declines if growth expectations are not met. For Chinese EV makers, the path to profitability remains uncertain as the price war shows no signs of easing. This article is for informational purposes only and does not constitute investment advice.
**BYD is splitting its engineering academy into five brand-specific research institutes, giving each sub-brand control over product development and profit-and-loss responsibility for the first time.** BYD is making four of its five sub-brands responsible for their own profit and loss, a restructuring that shifts power from the company's centralized engineering academy to individual brand teams. Under the new mechanism, Dynasty, Ocean, Fang Cheng Bao and Denza will draw on group resources for research, production and procurement as needed, with costs settled independently. Yangwang, the ultra-luxury brand, is temporarily excluded from the plan. "BYD will keep growing over the next three to five years," Wang Chuanfu, chairman of BYD, said at the annual shareholders' meeting on June 9. He projected the company could become the world's largest automaker by scale within five years. The engineering academy will retain only technology platform development, with most personnel reassigned to the five brand research institutes, according to a report by Jipian Lab. The change breaks a long-standing tradition at BYD, where vehicle models were defined and developed uniformly by the central academy, which also held core technology resources including hybrid and pure-electric platforms and chassis. The restructuring comes as BYD faces its first significant growth slowdown in years. Sales climbed from 427,000 units in 2020 to 4.27 million in 2024, but growth decelerated to 7.7% in 2025. In the first five months of 2026, the company sold 1.41 million vehicles, down 20% from a year earlier. **Centralized model shows its limits** BYD's founder-led approach once delivered significant advantages. Wang made long-cycle technology bets without short-term profit constraints, including 180 billion yuan ($26.6 billion) in cumulative research and development spending from 2008 to 2024. In 2019, when net profit was just 1.6 billion yuan, the company spent 5.6 billion yuan on R&D. That discipline produced breakthroughs such as the Blade battery and in-house IGBT chips, the latter stemming from BYD's 2008 acquisition of bankrupt Ningbo Zhongwei Semiconductor for 170 million yuan. But as BYD expanded to operate multiple sub-brands targeting different price points and customer segments, the limits of the centralized model emerged. Denza, Fang Cheng Bao and Yangwang require distinct product definitions, design languages and channel strategies, yet the development inertia of emphasizing technology leadership tended to worsen homogenization across brands. Fang Cheng Bao illustrates the tension. The brand entered the market with rugged off-roaders, but after the Bao 5's performance fell short of expectations, it cut prices and introduced the more mainstream Tai series, drifting from its original "premium personalized" positioning toward the mass market. BYD is not alone in rethinking its structure. Geely Auto, after announcing its Taizhou Declaration in 2024, shifted from a fragmented approach to a centralized model, setting up a unified central research institute while establishing separate vehicle research institutes for Lynk & Co, Zeekr and others — a logic that closely mirrors BYD's current adjustment. BYD shares fell 4% on June 18, with short selling reaching $434 million, or 17.3% of total turnover, showing investor caution about near-term disruption. The restructuring could improve cost allocation and brand accountability over time, but the 20% sales decline in 2026 suggests the company faces immediate demand challenges. Wang's five-year target of becoming the world's largest automaker will depend on whether the new structure can reverse the sales trend without sacrificing the R&D intensity that built BYD's technological edge. This article is for informational purposes only and does not constitute investment advice.