Wang Chuanfu boosted the morale of BYD shareholders.

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Author | Zhou Zhiyu

After several years of rapid growth, China's new energy vehicle market has entered a period of uncomfortable adjustment.

BYD, which once led the way relying on its technological advantage, is now facing a group of rapidly catching-up contenders. In May 2026, Leapmotor’s monthly sales exceeded 80,000 units for the first time, a year-on-year increase of over 80%. Xiaomi stabilized at monthly sales of 30,000 units, and Geely’s domestic monthly sales reached 153,000 units, closing in fast. The whole market has shifted from a pattern with one dominant and many secondary players to a multi-line entanglement.

In such an environment, the numbers for BYD are not easy. In the first five months of this year, cumulative sales exceeded 1.405 million units, but were down more than 20% year-on-year. The A-share stock price fell from its high in May 2025 (137.67 yuan/share) to just over 90 yuan. As of June 9, 2026, BYD’s year-to-date growth was -5.97%.

At the 2025 annual shareholders meeting on June 9, a shareholder choked up while asking about the company’s prospects. BYD Chairman Wang Chuanfu tried to encourage shareholders, boldly claiming that within five years, BYD aims to achieve “true global number one” in scale.

However, more than outlining long-term visions, Wang Chuanfu spent most of the meeting addressing current performance pressures. His core assessment: BYD’s current sales pressure mainly comes from production capacity limitations.

Wang Chuanfu stated that the market feedback for the second-generation Blade Battery is good, but the production line is transitioning, and capacity ramp-up can’t keep pace with orders. As production ramps up, by the end of this year, BYD’s monthly sales will increase by 20,000 to 30,000 units. This year’s sales depend on how many batteries can be delivered; real expansion will have to wait for next year.

This is not the first time Wang Chuanfu has mentioned the impact of the second-generation Blade Battery’s capacity on sales. At the Leap Commercial Research Institute’s conference for one thousand attendees on May 15, 2026, he publicly stated that “orders exceed supply, capacity is stuck on the battery side,” and said that several top-selling models across BYD’s four brands are waiting for batteries.

The capacity shortage is partly due to technical reasons. The second-generation Flash-Charge Blade Battery, launched in March, can charge from 10% to 70% in five minutes, a leap in performance. But upgrading the technology means old and new production lines have to be adjusted simultaneously, making short-term growing pains unavoidable. The first flagship model equipped with this battery, the Datang EV, will launch on June 17, and has received over 100,000 pre-sale orders in two weeks, with a range of 950 kilometers. From the product side, market acceptance for the new battery is not a problem.

According to Wallstreetcn’s previous supply chain insights, due to process adjustments, the capacity of the second-generation Blade Battery is still ramping up; it is expected that capacity constraints for high-end models will ease in Q3 2026. Other automakers also have similar battery solutions. Whether BYD can deliver as scheduled before achieving full capacity is the key to maintaining its advantage.

Overseas, Wang Chuanfu revealed that the original annual sales target of 1.6 million vehicles is expected to be exceeded, but he emphasized the need for local adaptation, “so as not to make competitors too nervous.”

The more urgent problems are in the financial report. In the first quarter, only 381,000 units were sold domestically, nearly halved year-on-year; overseas accounted for almost half of total sales of 700,000 units. Revenue was 150.2 billion yuan, and profit was 4.085 billion yuan, down 12% and 55% respectively. There was a one-time hit of about 4 billion yuan in exchange losses that weighed on profits, but real volume contraction is also happening. Gross margin rebounded to 18.8% quarter-on-quarter, which was one of the few highlights, but could not prevent profit collapse due to falling volume.

May’s data showed a turning point. Monthly sales of 383,500 units ended eight straight months of year-on-year decline, and overseas exports hit a new record high of 160,000 units. Looking further, domestic sales were just 220,000 units, with overseas markets actually propping up overall sales. With high overseas growth and profit, but slowing domestic volume and low gross margin, BYD’s profit engine is shifting quickly abroad.

Wang Chuanfu attributed domestic sales pressure to production capacity transitions. Judging from current progress, production line adjustments are indeed underway—and the validation window for this statement is not far off: as the second-generation Blade Battery lines gradually come online, sales data in the second half of the year should offer a clearer answer.

At last December’s extraordinary general meeting, BYD had already seen seven straight months of falling domestic sales year-on-year. Back then, Wang Chuanfu attributed it to “declining technological lead and industry homogenization.” From demand-side competition issues to supply-side production bottlenecks, it shows BYD’s assessment of the domestic market is still dynamically adjusting.

Several international investment banks still maintain a Buy rating on BYD. Goldman Sachs gave an A-share target price of 137 yuan in April this year, projecting total sales of 5.05 million units for the year; Morgan Stanley projected overseas sales to reach 1.6 to 1.8 million units. But even for the most optimistic institutions, incremental growth expectations are mainly anchored in overseas expansion and capacity recovery; the domestic market is largely something to be stabilized.

Wang Chuanfu has chosen to explain the current situation with a capacity narrative—whether this can keep shareholders committed will be seen in the second half of the year.

Risk Warning and DisclaimerThe market carries risks; investing requires caution. This article does not constitute individual investment advice and does not consider the specific investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their individual situation. Invest accordingly at your own risk. ```