BREAKINGVIEWS-BYD-led $100 bln EV stock slump goes too far

By Katrina Hamlin

HONG KONG, Feb 6 (Reuters Breakingviews) - China's electric-car makers are taking too much of a beating. Shares in companies from Nio 9866.HK to Xpeng 9868.HK fell yet further this week after BYD 002594.SZ, which recently displaced Elon Musk's Tesla TSLA.O as the world's largest manufacturer of battery-powered vehicles, reported January sales in the People's Republic plummeted 30% compared with the same month last year. That sent shares in the company founded and run by Wang Chuanfu down as much as 8%, leaving the carmaker trading a third, or roughly $70 billion, below its peak last year as of Friday. Throw in Nio, Xpeng, Geely Automobile 0175.HK and Stellantis' STLAM.MI partner Zhejiang Leapmotor 9863.HK, and that rises to almost $100 billion. While caution is warranted, shareholders are overdoing it.

On the surface, BYD's lacklustre sales numbers would seem to add to a pile-up of bad news for the industry in China: competitors have been waging a punishing price war for some three years; at the end of 2025 Beijing reduced some tax breaks for buyers of new EVs; and the China Passenger Car Association last month forecast EV sales growth would halve to around 18%.

Yet for BYD, at least, analysts reckon earnings can rise 29% in 2026. That’s because exports now make up more than half of the bottom line. Each car sold overseas generates about $3,500, up to 4 times as much net profit as one sold in China, per Bernstein. BYD's overseas sales target this year is 1.3 million vehicles; that would contribute $4.5 billion to earnings, around two-thirds of its 2026 estimated total, per Visible Alpha. The group already exported around 100,000 vehicles in January, a more than 50% increase on last year, filings show.

BYD can improve domestic performance, too. It's rolling out new cars and fast-charging batteries this year, and may be able to sell more of the latter to external clients.

Its rivals have levers to pull as well. Leapmotor and Xpeng – whose shares are around 40% below their 2025 peak – are expanding overseas and are earning money by sharing tech with their respective partners, Stellantis and Volkswagen VOWG.DE , as well as others.

A slowdown at home will still hurt, especially this quarter when the Lunar New Year holidays disrupt sales. But the Year of the Horse could defy China's electric-vehicle bears.

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CONTEXT NEWS

Electric car and battery maker BYD sold 210,051 vehicles in January, down 30% from the same month in 2025, according to a filing on February 1.

The company exported 100,482 vehicles in that period. A year earlier, the company said it sold 66,336 units overseas in January, without disclosing a specific figure for how many it exported.

By market close on February 5, the company’s Hong Kong and Shenzhen-listed shares had fallen 7% and 1% respectively since January 30, the last trading day before the sales update.