BYD loses $45 billion in market cap, analysts turn bearish as concerns mount

Shares of Chinese EV giant BYD Co. have taken a nosedive from the all-time highs they hit just four months earlier. Concerns over the company's ability to fend off increasing competition amidst a price war in China, is adding to the worries.

The sell-off has resulted in BYD losing over 30% from its peak, that has wiped out over $45 billion (Nearly ₹4 lakh crore) in its market value.

Such has been BYD's outperformance, that despite only two analysts for China-listed and three for Hong Kong-listed shares having a "sell" rating on the stock, the number of "sell" ratings on the stock have risen to the highest level since 2022. Majority of the analysts still continue to maintain a "buy" recommendation on the stock.

BYD has been taking the lead in offering deep discounts to consumers, triggering a price war in an already competitive industry in China. It is taking the lead as rivals like Geely Automobile Holdings Ltd. and Zhejiang Leapmoter Technology Co. are gaining market share from BYD. Adding to that is China's crackdown on excessive competition, price wars, which are creating a deflationary pressure, according to the administration, are adding to the concerns.

For the June quarter, BYD's profit fell 30% from last year, its first profit drop in over three years. It now expects to deliver 4.6 million vehicle this year, a big drop from its earlier target of 5.5 million units. To meet this lowered target, BYD must deliver around 1.7 million units in the last four months of the year, which analysts term as a "tall ask."

Analysts believe that the next major trigger for BYD will be the launch of its new models in the first quarter of 2026. Some of its upcoming launches were postponed to next year, to make the new vehicles more competitive with its rivals.

“No OEM could keep their product cycle strong forever — even BYD cannot,” said Xiao Feng, co-head of China industrial research at CLSA Hong Kong. BYD’s offerings have become stale since its dominance over 2018-2024, and buyers have turned to “new faces” like Geely and Leapmotor.

Despite the domestic struggles, BYD is making inroads overseas, with volumes likely to reach 9,00,000 to 1 million units this year, above the management target of 8,00,000, according to Goldman Sachs.

The recent correction has also led to BYD's valuations dropping to 17 times forward earnings, which is below the three-year average of 20 times.

“While I believe investors retain a positive long-term view, there is a real concern around BYD’s aggressive ‘market share gain by pricing pressure’ strategy in the anti-involution context,” said Kevin Net, head of Asian equities at Financiere de L Echiquier. “In the short term, this should still weigh on both topline and margins.”

(With Input From Agencies.)