Is It Finally Time to Jump Off the BYD Bandwagon?

Key Points

• Analysts have been downgrading BYD's full-year delivery forecast.

• BYD is currently on pace to fall short of 2025 delivery estimates.

• BYD is facing a challenging Chinese market amid a brutal price war.

• 10 stocks we like better than BYD Company ›

Over the past few years, BYD investors have been spoiled. The Chinese electric vehicle (EV) juggernaut swept through the country's domestic EV market with relative ease and then applied tremendous pricing pressure with a long list of highly affordable and compelling EV vehicle options. While BYD has been a no brainer winner over the past five years with its stock trading nearly 380% higher over that time, it might finally be showing signs of slowing down.

Time to jump off the BYD hype train?

BYD's monthly sales and deliveries have stagnated over the summer months, which are traditionally slower selling months, providing fresh challenges for China's EV giant. Not only is BYD dealing with slowing sales, but it's also being reprimanded vocally by the Chinese government for applying so much pressure on pricing that it's caused a race to the bottom, slowly but surely eating away at industry margins. BYD slashed prices by as much as 34% in May, causing increased government scrutiny on the industry.

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In fact, in what would be a rare miss for the top Chinese EV maker, the company looks like it's going to fall short of its annual sales target for 2025. BYD would need to sell roughly 560,000 units monthly through December to hit its sales target, which would be more vehicles sold in one month than it ever has in its history -- BYD sold just short of 515,000 vehicles last December.

Image source: BYD.

And now analysts are stumbling over themselves to downgrade BYD's annual sales estimates. In fact, Deutsche Bank AG said it now expects BYD to deliver 5 million in wholesales, which is simply deliveries to dealer networks, which breaks down into 4 million domestic deliveries and 1 million overseas as the company continues its global expansion.

Morgan Stanley lowered its delivery projection to 5.3 million last month, noting that a smaller number of new models would be a drag on company deliveries. Perhaps even worse yet, Bloomberg Intelligence's Joanne Chen said BYD will be forced to sacrifice some profits, while maintaining large incentives and discounting, if it wants to stay on track and have a chance at reaching its delivery estimates.

"Regulatory scrutiny will temper direct cuts to vehicle sticker prices but competition isn't going away and retail promotions are still needed to sustain sales momentum," Chen said, according to Automotive News. "New model roll outs and steady tech upgrade are also crucial."

Global expansion

Further, when you back out BYD's global expansion and the estimated deliveries overseas, investors will see that BYD's domestic car deliveries in China are shrinking. In June, domestic deliveries slipped 8%, compared to the prior year. HSBC data shows that Geely was the largest gainer of market share during the first half of 2025, while BYD was one of the biggest losers.

Back to looking at BYD's global expansion, while the company is on pace to reach its forecast of 800,000 overseas deliveries, it still faces challenges in two emerging markets: Saudi Arabia and India. Both markets are potentially huge, but Saudi Arabia has EV market share of just 1% of total sales and faces high costs, charging infrastructure challenges, and extreme temperatures that make EV adoption slower in the region. India, the world's third largest automotive market, has similar problems and substantial tariff headwinds that can increase the cost of imported vehicles by 100% in some cases.

Ultimately, investors should prepare for an inevitable slowdown in BYD's expansion after years of rocketing higher in deliveries and stock price. That said, eventually it's likely that BYD and other Chinese automakers will enter the U.S. market, and that could provide the company's next massive boost in deliveries and financials -- but when that will happen is anyone's guess. Long-term investors should stay the course because even if BYD slows down from its rapid rise it's still in an incredible position to thrive globally in the years ahead.

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HSBC Holdings is an advertising partner of Motley Fool Money. Daniel Miller has no position in any of the stocks mentioned. The Motley Fool recommends BYD Company and HSBC Holdings. The Motley Fool has a disclosure policy.