BYD’s Record Year: A Milestone Tempered by Domestic Headwinds

BYD has solidified its position as the global leader in battery electric vehicle (BEV) sales for 2025, decisively surpassing Tesla in deliveries. The Chinese automotive giant reported a record year, meeting its revised annual target by selling approximately 4.6 million vehicles. Investor sentiment responded positively, particularly to robust export figures, driving the company's Hong Kong-listed shares notably higher on Friday.

The standout narrative for BYD in 2025 was the explosive performance of its international business. Exports have transformed into the company's central growth pillar, a strategic shift of increasing importance as the domestic Chinese market shows signs of saturation and intensifying price competition.

In December alone, the company shipped 133,172 vehicles overseas, representing a staggering 133% increase year-over-year and setting a new monthly record. For the full year, exports surpassed 1.05 million units, validating the success of BYD's aggressive expansion into Europe, Southeast Asia, and Latin America. This international push allows the company to redirect volume toward markets with healthier margins, countering pressure in its home market from rivals like Xiaomi and Geely.

Record Annual Figures Mask a Cooling Home Market

For the entirety of 2025, BYD delivered 4,602,436 New Energy Vehicles (NEVs), a 7.7% rise from the previous year. While this marks the company's slowest annual growth rate in five years, the underlying sales structure reveals a significant strategic pivot.

Key details from the annual report include:
* BEV Dominance: Sales of pure battery electric vehicles (BEVs) reached approximately 2.26 million units, surging by roughly 28% year-on-year. This performance places BYD well ahead of Tesla, which reported about 1.64 million BEV deliveries for the period.
* PHEV Decline: Conversely, sales of plug-in hybrid electric vehicles (PHEVs) fell to around 2.29 million units, a decrease of nearly 8%. This indicates a clear demand shift within BYD's own portfolio toward fully electric models.

However, a noticeable slowdown emerged in the crucial final month. December 2025 sales dropped to 420,398 vehicles, an 18.3% decline compared to December 2024 and a 12.5% drop from November. This cooling domestic demand was more than offset by the export surge, highlighting a growing divergence between BYD's home and international performance.

Should investors sell immediately? Or is it worth buying BYD?

Strategic Adjustments and the Tesla Rivalry

Management's decision to lower its original ambitious sales target of 5.5 million vehicles to 4.6 million mid-year proved prudent. BYD hit this revised target precisely, helping to stabilize market expectations despite the year-end domestic softness.

The changing dynamics with Tesla underscore broader industry trends. While BYD expanded its pure electric sales by 28%, Tesla's global deliveries contracted by approximately 9% in 2025. Analysts attribute Tesla's challenges to an aging model lineup and aggressive global price competition. BYD's advantage lies in its broader, more flexible model range and its ability to strategically balance volume between domestic and higher-margin international markets.

The Road Ahead: 2026 Targets and Market Sentiment

Looking to 2026, the focus shifts to whether BYD can sustain its growth trajectory amid rising trade policy barriers in key markets like Europe and North America.

Market expectations and company guidance point to several key objectives:
* Overall Volume: Industry forecasts suggest BYD could sell approximately 5.3 million vehicles in 2026.
* Export Goals: Company leadership is targeting 1.5 to 1.6 million units in exports, aiming to generate nearly one-third of its sales outside China.
* Product Innovation: New technology platforms and luxury models under the Yangwang and Fang Cheng Bao brands are anticipated to provide a fresh impetus for growth within China.

From an investment perspective, the equity market's positive reaction to a mix of record annual results and a weaker December suggests the domestic slowdown was largely anticipated. The current valuation appears to be rewarding the company's formidable international momentum and its clear lead in the global BEV race.