Buffett fled and BYD lost 40%. A trap or the buy of the decade?

As recently as last spring, BYD $BYDDY looked like an unstoppable machine. The Shenzhen-based company had just dethroned Tesla $TSLA as the world's largest electric-vehicle maker, introduced free assisted driving across its entire model range, and charging that can add 400 kilometers of range in five minutes. The shares on the Hong Kong exchange climbed to all-time highs, and investors vied to estimate when BYD would overtake Toyota in total sales as well.

Key points

Quarterly profit plunged 55%, yet BYD is one of only three Chinese EV brands that are profitable at all.
Overseas sales grew 71% in the half-year and already account for 44% of total volume – two years ago it was a tenth.
At home the company sold 40% fewer cars and, for the first time in years, was overtaken in China by rival Geely.
The dividend was slashed by roughly three-quarters and free cash flow plunged into negative territory – capital discipline went out the window.
Analysts nevertheless see an average target price 42% above the current price.

Fourteen months later the picture is different. The stock trades around USD 10.90 (HKD 85.80 in Hong Kong), roughly 40% below the spring 2025 peak; year to date it is down about 13%. Net profit for the first quarter of 2026 dropped 55% year-on-year. In its home market, which long acted as an impregnable fortress, the company sold 40% fewer cars in the half-year and was overtaken for the first time in the first quarter by Geely $GELYF .

The paradox is that the war that is now eating BYD's margins was largely started by the company itself. The across-the-board discounts in May 2025, when it cut prices on more than twenty models by up to a third, triggered a chain reaction that the whole industry had to respond to – and that the Chinese government eventually publicly criticized. The Chinese electric-car market fell 13% in the first half of this year, and according to available data only three brands are profitable in it: BYD, Xiaomi $XIACY and Leapmotor.

But the same company that is bleeding at home is simultaneously building a second story. Overseas sales grew 71% in the first half of 2026 to 792 thousand vehicles and already account for almost half of volume. In the UK, BYD nearly doubled sales in the half-year, it is starting factories in Hungary and Brazil, and exports exceeded one million cars for the first time last year. And analysts at major banks maintain target prices dozens of percent above where the stock trades.

So what exactly is BYD today: a temporarily wounded champion that will pick up the wreckage of its competitors once the market cleanses itself, or the first big victim of a price war from which the Chinese auto industry will not recover any time soon?

Buffett fled and BYD lost 40%. A trap or the buy of the decade?

Finish the whole article on BRK-B

European stocks jump at the open as oil retreats