BYD Bets on Pricier Cars to Counter Profit Squeeze as Exports Hit Record and Shorts Pile On

The Chinese electric-vehicle giant finds itself at an inflection point. Record overseas shipments and a strategic push into higher-margin models are colliding with a sharp profit decline and unprecedented short-selling activity, creating a tug-of-war that has split the market’s attention between near-term headwinds and a longer-term growth story.

Short sellers made their presence felt early this week, piling into BYD’s Hong Kong-listed shares with unusual intensity. On Tuesday, short-sale volume reached HK$611.8 million, pushing the short ratio to an extraordinary 130.83% of daily turnover — a level that signals aggressive bets against the stock. The trigger was clear: first-quarter net profit attributable to shareholders slumped 55% to 4.08 billion yuan, hit by brutal price competition in China’s domestic market.

That profit pain, however, has not deterred some of the biggest names on Wall Street. JPMorgan, which rates the stock “Overweight” with a 120 HKD target, sees the current weakness as temporary. The bank is focusing on a crucial shift in product mix: by the end of 2026, more than 30% of BYD’s domestic sales are expected to come from models priced above 200,000 yuan, up from the company’s traditional stronghold in cheaper segments. Higher-priced vehicles, JPMorgan argues, can stabilise profitability if volumes materialise as planned.

Goldman Sachs echoes that view, pointing out that operating profit in the first quarter actually exceeded expectations by 82% — a detail that got buried under the headline numbers. The bank notes that the overseas share of BYD’s sales volume jumped from 21% to 46% in the quarter, driven by a 71% leap in April international deliveries. Overall, exports hit a record 134,500 units last month, accounting for more than 40% of total sales of 321,123 vehicles — a 7% month-on-month gain that helped offset a 21.5% contraction in China’s broader passenger-car market.

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

Yet while exports surge, the policy environment in Washington is turning hostile. On 11 May, the US Congress introduced the bipartisan “Connected Vehicle Security Act of 2026,” a bill designed to bar Chinese vehicles and related connectivity technology from the American market on national security grounds. The legislation lands as high-level US-China trade talks take place in Beijing, but the legislative track in Washington is running on its own timetable — and often faster than diplomacy.

Back on the product front, BYD is pushing ahead with its own technology offensive. The company’s FLASH-Charging system, capable of delivering up to 1,500 kW, is central to the premium push, promising to shorten charging times and justify higher price tags. The new Great Tang SUV is the latest vehicle riding that wave, and early export data suggest it is gaining traction in Europe and Latin America.

On the bottom line, there are signs the worst may be over. The gross margin recovered sequentially to 18.81% in the first quarter, even as currency losses and impairments totalling around 1.2 billion yuan weighed on reported earnings. Goldman Sachs and Nomura both argue that the first quarter marked the trough for both profit and sales, with a gradual recovery expected from the second half of the year.

BYD at a turning point? This analysis reveals what investors need to know now.

The analyst community is broadly constructive despite the profit miss. The twelve-month consensus price target stands at 124 HKD, with Citigroup naming BYD a sector favourite at 142 HKD. BNP Paribas is the outlier at 87 HKD. The stock itself has rebounded sharply, closing Wednesday at 110.30 HKD — a 4.95% gain that took it well past the 100 HKD mark and erased losses since mid-April.

Investors now have a few dates on the calendar: the annual general meeting on 9 June, followed by an ex-dividend date on 11 June for a payout of 0.36 yuan per share, with payment due in late July. The broader test, however, will come in the second half of the year, when the market sees whether the premium model mix finally lifts margins — and whether surging exports can keep making up for the stagnation at home.

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