BYD

BYD (BYDDY -1.09%) produces far more vehicles than Tesla. But you wouldn’t be able to tell based on stock prices alone. The Chinese electric vehicle maker’s market cap is around $990 billion, while U.S.-based Tesla is valued at more than $1.3 trillion.

Part of the valuation gap is explained by BYD’s recent struggles. Shares are down 20% in value since May. Tesla stock, meanwhile, has gained more than 40% in value over that time period. Is this your chance to buy BYD at a rare discount?

There’s no doubt that shares look compelling. But there are two critical factors to consider before jumping in.

1. Warren Buffett changed his mind about BYD

Legendary investor Warren Buffett was one of the first major investors in BYD. He first acquired shares 17 years ago, paying $230 million for a 10% stake in the business. It wasn’t actually Buffett that spotted the opportunity, but rather his longtime business partner, Charlie Munger.

Earlier in its history, BYD was focused on battery technology. Through vertical integration and affordable labor in China, the company was able to keep costs low, leading to major customer wins. It launched its first vehicles in 2003, gradually expanding its portfolio to include two of the most popular EVs in the world. This year, analysts expect the company to produce more EVs than Tesla, making it the number one EV maker worldwide.

Over the last 17 years, Buffett has made more than 2,000% on his original investment. This year, however, he liquidated his entire position. Why? Even though it has massive scale, BYD is still primarily a Chinese company. Around 80% of its sales are domestic, a reality that creates two critical headwinds.

First, the Chinese economy has been gradually slowing. Last year, GDP in the country grew by just 5% — one of the lowest figures in decades. Accordingly, BYD’s domestic sales have struggled in 2025, leading to a sales forecast cut by management.

Second, the Chinese government has a heavy influence on BYD. The company has received significant financial support from the government over the years. But that generosity may be ending. BYD failed an audit this summer, which may force it to repay more than $50 million in subsidies. The Chinese government’s involvement in the auto industry has ramped up this year, with the ultimate results still uncertain.

Buffett hasn’t yet commented on his stake sale. But with rising political uncertainty and a shaky domestic market, it appears as if the Oracle of Omaha has had enough with this long-term position.

Image source: Getty Images.

2. Don’t compare BYD to Tesla

Due to China’s sluggish GDP and falling population growth, it will be difficult for BYD’s sales to maintain historical growth rates over the long term without expanding international sales aggressively. Increasing regulatory oversight may complicate efforts to do so, but BYD is making moves to shift its focus away from China.

A recent deal with Uber Technologies, for instance, attempts to make its vehicles more accessible to drivers in Europe and Latin America. The deal also paves the way for BYD to help power Uber’s robotaxi division in certain parts of the world.

On the surface, now looks like a compelling time to pick up BYD shares. While challenges exist, the company has an impressive manufacturing base, with the ability to sell cars at a price point that few competitors can match at scale. Its recent Uber deal, meanwhile, gives it exposure to the robotaxi market, which could eventually be worth more than $5 trillion globally.

Add in that shares trade at roughly 1 times sales versus Tesla’s valuation of nearly 17 times sales, and it’s not hard to get excited. Here’s the problem: BYD isn’t Tesla. Tesla, for instance, has a leading position in the robotaxi market, making it far more than a simple auto manufacturer. BYD’s position in the market is simply as a supplier to operators like Uber.

Is BYD stock a buy today? Patient investors comfortable with Chinese regulatory uncertainty may think so. But the valuation gap between BYD and Tesla shouldn’t be a motivating factor. These are two very different businesses.

I’M a big fan of small and simple cars because I like value for money more than I do screens and gadgets.

This BYD Dolphin Surf is small and simple.

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Just press and go.

It’s value for money at £18,650.

And yet it’s got a rotating touchscreen and all those gadgets thrown in anyway.

Where’s the catch?

I can’t see one.

It knocks a Dacia Spring and Leapmotor T03 out of the park because it’s a proper car for not much more and it’s comfortably less than the already brilliant-value Renault 5.

Finance from £269 a month with £269 deposit. Or £199 a month with about £3k deposit.

It’ll cost pennies to run.

I reckon many will be bought as second cars but end up being the one owners use the most.

Dolphin Surf has four seats, three with ISOFIX anchor points for the kiddlywinks, and a surprisingly practical boot that’ll swallow the Friday big shop.

Properly comfy seats by the way. Made of “vegan leather” whatever that means.

Big drink holders. Phone storage tray.

Apple CarPlay. Reversing camera.

Adaptive cruise control for your out-of-town runs.

All things that please and all included in the price.

You can even use your little BYD bud as a mobile power bank – running everything from party lights to a fridge.

Now I should spell out that Dolphin Surf comes in two battery sizes.

The entry-level Active gets you a 137-mile battery by the WLTP test and a big enough e-motor to keep you swimming in quick traffic.

Then there’s the £22k Boost nudging 200 miles from the 43kWh battery.

‘BRIM THE BATTERY’

Both use lithium iron phosphate (LFP) chemistry for higher levels of durability and safety.

So you can “brim” the battery every time without depleting it.

Both roll on Hankook tyres. Another positive.

Even the lime green paint job is free.

How safe is it? It’s engineered to attain a four-star safety rating.

The body uses 68 per cent high-strength steel and the car is brimming with anti-crash gear.

The car will be made in Hungary soon – and avoid tariffs.

I told you BYD would quickly chime with UK drivers and the Chinese are already outselling Honda, Citroen, Fiat and more.

There are a load of plug-in hybrids coming next, including a junior SUV and a pick-up truck called Shark.

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Labour prosecutors allege that workers were brought to Brazil illegally and toiled in ‘slavery-like conditions’.

Brazilian labour prosecutors have filed a lawsuit against the Chinese auto manufacturer BYD and two contractors over allegations of illegally trafficking labourers to live and work under conditions “analogous to slavery”.

On Tuesday, the prosecutors, charged with enforcing labour laws, said in a statement that they would seek 257 million reais ($45m) in damages from BYD as well as contractors China JinJiang Construction Brazil and Tecmonta Equipamentos Inteligentes.

They accused the three companies of trafficking Chinese workers to build a BYD plant in Camacari, in the northeastern state of Bahia. There, the prosecutors allege that the companies subjected the workers to “extremely degrading” conditions.

“In December last year, 220 Chinese workers were found to be in conditions analogous to slavery and victims of international human trafficking,” the statement said.

The damages the prosecutors are seeking amount to a penalty of 50,000 reais ($8,867) per violation, multiplied by the number of workers affected, in addition to moral damages.

The lawsuit is the result of a police raid in December 2024, during which authorities say they “rescued” 163 Chinese workers from Jinjiang and 57 from Tecmonta.

The prosecutors say the workers were victims of international human trafficking and were brought to Brazil with visas that did not fit their jobs.

They also allege that conditions at the construction site left the labourers almost totally dependent on their employers, by withholding up to 70 percent of their wages and imposing high contract termination costs. Some of the workers even had their passports taken away, limiting their ability to leave, according to the prosecutors.

The lawsuit also describes meagre living conditions, including some beds without mattresses.

“In one dormitory, only one toilet was identified for use by 31 people, forcing workers to wake up around 4am to wash themselves before starting their workday,” the prosecutors’ statement notes.

Brazil is the largest market for BYD outside China. The Chinese auto giant has said that it is committed to human rights, is cooperating with authorities and will respond to the lawsuit in court.

A spokesman for the company said in December that allegations of poor working conditions were part of an effort to “smear” China and Chinese companies.

But the Brazilian labour prosecutors rejected the notion that their lawsuit was based on anti-Chinese sentiment.

“Our lawsuit is very well-founded, with a substantial amount of evidence provided during the investigation process,” deputy labour prosecutor Fabio Leal said in an interview.

He stated that the workers, who have all returned to China, would receive any payments related to the lawsuit there, with the companies in Brazil responsible for providing proof of payment.

By Tina Teng

Published on
27/05/2025 – 7:49 GMT+2

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Shares of BYD, the largest Chinese electric vehicle brand, tumbled 8.6% on Monday following news that the company offered steep discounts in some models, sparking concerns about a fresh price war in China’s EV markets.

The decline continued in Tuesday’s Asian session, with BYD shares falling a further 4% in Hong Kong as of 5am CEST. Despite the drop, the stock remains up more than 50% year-to-date on the Hong Kong Stock Exchange. In contrast, global competitor Tesla saw little change in its share price on Monday, but remains down 13% year-to-date in 2025.

The aggressive pricing strategy has raised concerns over slowing EV demand amid persistent weakness in the Chinese economy and heightened US-China trade tensions. Other major Chinese EV makers also saw declines on Monday, with shares of Geely, Great Wall Motor, and Xpeng falling between 4% and 9% due to fears that deeper discounts could squeeze sector profit margins.

A sweeping price cut

BYD announced broad price reductions across 22 electric and plug-in hybrid models, effective until 30 June, according to a post on the company’s official Weibo account. The discounts, which range from 10% to 30%, apply to vehicles from its Ocean and Dynasty series. The most significant cut was for the Seal 07 DM-i model, with a discount of 53,000 yuan (€6,460), or 34%.

Analysts expect rival Chinese carmakers to follow BYD’s lead as domestic competition intensifies. The pricing strategy also appears aimed at reducing the excess inventory of older models. In the first four months of 2025, BYD’s dealer inventory rose by approximately 150,000 units, equal to around half a month’s worth of retail sales, according to CnEVPost.

Citi analysts estimate that the price reductions could drive a 30% to 40% weekly surge in sales. This may potentially offset margin pressure.

BYD growth remains robust, surpassing Tesla in European sales

Despite investor concerns, BYD remains on a strong growth trajectory and continues to challenge Tesla in global markets. In April, BYD reported 380,089 sales of new energy vehicles (NEVs), a 21% year-on-year increase. Overseas sales also set a new record for the fifth consecutive month.

In a key milestone, BYD outsold Tesla in Europe for the first time last month, with 7,231 new battery-electric vehicles registered, a 169% year-on-year jump. By comparison, Tesla’s sales have fallen across Europe in 2025, a trend attributed in part to growing anti-Tesla sentiment linked to CEO Elon Musk’s political involvement.

During the first quarter, BYD sold nearly 1 million vehicles, placing it firmly on track to achieve its 2025 target of 5.5 million annual vehicle sales. The company reported a net income of 9.15 billion yuan (€1.11 billion), with a gross profit margin of 20%. This compares with Tesla’s $409 million (€359 million) and a 16% margin over the same period.

BYD is also investing in advanced driver-assistance systems. The company’s adoption of DeepSeek’s R1 AI model is expected to rival Tesla’s Full Self-Driving (FSD) technology, potentially at a significantly lower cost.

In addition, BYD is China’s second-largest battery manufacturer after CATL, giving it a competitive edge in cost control and vertical integration.

BYD is likely to remain less impacted by US tariffs as it does not sell passenger vehicles to the US. Instead, it is focusing on Southeast Asia and South America for international growth. The company is also establishing a manufacturing plant in Hungary, which is expected to boost European sales.