BYD's 150 Billion RMB Guarantee Plan Reveals the Depth of Its Domestic Crisis

Shareholders gathering in Shenzhen on Tuesday face an unusual agenda: approving a dividend of just 0.358 renminbi per share alongside a colossal guarantee framework of up to 150 billion renminbi. The latter is BYD's bid to secure credit lines for its sprawling international subsidiaries, a move that underscores just how capital?intensive its global push has become. But the meeting comes at a moment when the home market is delivering blow after blow.

Exports provided the only bright spot in May. BYD shipped 160,644 new?energy vehicles overseas, a record and an 80 percent surge from a year earlier. That lifted total May sales to roughly 383,000 units — a modest 0.3 percent gain and the first year?on?year increase in nine months. The export channel now accounts for 42 percent of overall volume, a stark reminder that the company's growth engine has moved abroad.

Inside China, the story is grim. Domestic sales plunged 24 percent in May, marking the thirteenth consecutive monthly decline. Regulatory efforts by Beijing to curb aggressive price cuts have done little to revive showroom traffic. Dealers report that recent software upgrades have failed to excite budget?conscious buyers, leaving inventories bloated and margins under relentless pressure.

The financial toll is unmistakable. First?quarter net profit collapsed 55 percent, while revenue shrank nearly 12 percent. The brutal price war that CEO Wang Chuanfu has called a "knockout phase" is eating into profitability on every vehicle sold. The company is targeting up to 5.5 million deliveries for the full year, yet after five months it has only managed 1.41 million — a pace that implies a dramatic acceleration is needed in the second half.

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Adding to the pressure, Chinese solar giants are muscling into battery storage — a market long dominated by BYD and CATL. JinkoSolar plans to lift its battery capacity from 5 GWh to as much as 14 GWh by the end of 2026. JA Solar, LONGi Green Energy and Trina Solar are also expanding their storage offerings, aiming to bundle modules with batteries as photovoltaic growth slows and module prices weaken. Rystad Energy forecasts a 30 percent jump in Chinese battery storage exports next year to 150 GWh, a pool that is drawing ever more competitors.

BYD's own battery?storage business now faces a clear competitive impulse. While not an immediate threat, the influx of solar?backed rivals could compress margins in a segment that had offered a buffer against automotive headwinds. The company's broader energy business remains a key pillar, but the direction of travel is unmistakable: more players chasing the same growth.

The stock market has taken note. Shares closed Friday at €9.84, barely 3.5 percent above the 52?week low of €9.51 and well below the 50?day moving average of €11.03. The year?to?date loss stands at 10.18 percent. With the stock hovering near its floor, any disappointment from Tuesday's AGM could trigger another leg lower.

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Two data points later this week will test the narrative. China's consumer and producer price indices for May are due Wednesday; the April readings were 1.2 percent and 2.8 percent year?on?year, respectively. For BYD, the PPI figure matters most, since raw material costs feed directly into the margin debate in both autos and batteries.

Management's tone at the AGM will be equally critical. Investors want clarity on export trajectory, battery storage strategy, and whether the 150 billion renminbi guarantee is a prelude to even larger commitments abroad. Without concrete evidence that overseas profits can offset the domestic bleeding, the share price is likely to remain pinned near its lows — waiting for a catalyst that has yet to arrive.

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