HONG KONG — A prolonged selloff in BYD shares has wiped more than $60 billion off the company’s market value since May, highlighting mounting investor concern over profitability across China’s electric vehicle sector as domestic demand weakens and production costs rise.
BYD’s Hong Kong–listed shares fell again this week after weaker-than-expected sales data, extending losses that have spread across EV peers and added pressure to a broader market already grappling with uncertainty over taxes and potential business disruption from artificial intelligence. The developments were reported by Bloomberg, citing market data, analyst commentary and company disclosures.
Demand weakens as costs rise
Investors had anticipated slower EV growth this year following cuts to government subsidies, with bearish positions building since late 2025. However, analysts say the pace of demand deterioration has surprised markets, particularly as raw material prices continue to climb.
BYD’s January slump deepens as China EV giant posts fifth straight sales decline
Battery input costs have surged, with lithium prices more than doubling over the past three months. Copper and aluminum prices have also risen, while a shortage of memory chips has increased costs for intelligent vehicle components, further squeezing manufacturers’ margins.
“Investor sentiment is extremely negative,” said Xiao Feng, co-head of China industrial research at CLSA, warning that persistent cost pressures could lead to broad earnings downgrades across the sector.
Sales data points to broader strain
January sales figures showed the slowdown extending even to market leaders. BYD’s domestic deliveries fell to 109,569 units, nearly half the level recorded a year earlier. Other automakers reported similar declines, with XPeng posting a drop of more than 30% in total deliveries.
While exports remain a relative bright spot, Chinese carmakers continue to rely heavily on an intensely competitive domestic market. Morgan Stanley estimates that first-quarter volumes for many local brands could fall 30% to 40% from the December quarter.
Margin pressure and investor positioning
Rising input costs are colliding with aggressive discounting as automakers attempt to stimulate demand. Analysts estimate that additional costs per vehicle could reach about $1,000 for some models.
Research from Bernstein suggests mass-market brands with thinner margins — including Li Auto and Nio — are more exposed, while BYD’s in-house supply chain provides some insulation.
Short sellers have increased positions in EV stocks tracked by the Hang Seng Tech Index, according to data from S3 Partners, reflecting heightened skepticism ahead of earnings season.
“There is limited visibility on how much of the cost increase automakers can pass on to consumers while competition remains intense,” said Joanne Cheng, investment manager at Aberdeen Investments.
Valuations ease, caution persists
BYD now trades at about 16 times forward earnings, below its three-year average of 18. Although some EV stocks rebounded on Friday after Nio indicated it may have posted its first quarterly profit, investor caution remains.
Gareth Pan, senior investment manager at Pictet Asset Management, said valuations have moderated but risks remain elevated. “It is still too early to step in,” he said, citing uncertainty around the full-year outlook despite potential export growth and advances in driver-assistance and autonomous technologies.
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