BYD Nears Pivot Point: Second European Factory in Sight as Record Exports Battle a 55% Profit Plunge
Published on 07/07/2026 at 02:54 | Redaktion boerse-global.de
BYD delivered more than 403,000 vehicles in June and exported nearly 175,000 of them — both records. Yet its stock hovers near €9.34, just 16% above the 52-week low of €8.03 set at the end of June. The disconnect between operational momentum and market sentiment has never been wider, and the next catalyst could come from an unexpected quarter: a second European factory.
Alfredo Altavilla, BYD’s special adviser for Europe, told the Reuters Automotive Conference in Frankfurt on July 1 that two teams are scouting existing sites in Spain and France. A decision, he said, must come “very soon.” The urgency is real — the EU’s additional tariff of roughly 17 percentage points on Chinese EVs has been in place since July 2024, and every month of imported production costs BYD margin. A second plant, complementing the Szeged facility in Hungary that is expected to begin mass production in the fourth quarter of 2026, would lock in tariff-free capacity and signal the company’s long-term commitment to the region.
The export engine is already firing on all cylinders. Overseas sales hit 175,349 units in June, a 95% year-on-year jump that pushed foreign deliveries to 43% of total monthly volume. In May, the company cracked 160,000 overseas sales for the first time. Management has responded by raising its 2026 export target from 1.3 million to 1.5 million vehicles. Australia sales surged 130%, shaking Toyota’s long-standing dominance, while German registrations quadrupled to roughly 6,300 units in June alone. At the same time, BYD is pushing into premium territory: combined sales of the Fang Cheng Bao, Denza and Yangwang brands rose 62% in the first half, and the Denza Z9GT launched in Spain at €101,000.
Should investors sell immediately? Or is it worth buying BYD?
That export firepower is desperately needed to offset a collapsing home market. China’s EV market shrank for the sixth consecutive month in June, falling 7% year-on-year, and the first-half contraction stands at 13%. Consulting firm AlixPartners projects a 28% drop for the full year. The price war has shredded BYD’s margins: net profit for 2025 fell 19% to ¥32.6 billion, and the net margin narrowed to 4.1% from 5.2%. The first quarter of 2026 was even worse — net income plunged 55.4% to ¥4.08 billion, the lowest quarterly figure in over three years. Meanwhile, new government payment rules that force faster settlement with suppliers have pushed BYD’s debt ratio to 25%.
Vertical integration remains the bull case’s best defence. BYD manufactures its own batteries, semiconductors and much of its vehicle architecture, giving it cost control no European incumbent can match. This should help absorb tariff shocks better than rivals. The luxury push also supports margins: if domestic volumes weaken further, higher-priced models can provide a buffer. A second European factory would accelerate this strategy, but it requires capital at a time when the balance sheet is already under strain — and neither the financing terms nor the purchase price for the plant have been disclosed.
The bear case centres on the risk that China’s domestic weakness forces more price cuts before Szeged can produce meaningful volumes. Retail sales in China shrank in May for the first time in four years, and further deterioration could trigger another round of price wars that would crush per-vehicle profit. On the trade front, the EU and China are still negotiating minimum prices, and the threat of definitive tariffs remains. In the UK, levies on certain models are scheduled to take effect in 2027. The stock trades nearly 13% below its 200-day moving average of €10.75, suggesting the market is already pricing in these headwinds.
Technically, the near-term path hinges on two events: a formal announcement of the second European site (Altavilla signalled urgency but no date), and the upcoming quarterly report, which must show whether BYD held its estimated profit of ¥8,728 per vehicle in June. The 50-day moving average at €9.93 and the 100-day line at €10.53 sit above the current price, while the €8.03 low provides a floor. A breakout above €9.93 could shift momentum, but without a concrete factory deal and evidence that domestic margins have stabilised, the stock may continue to trade in the shadow of its own record exports.
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