BYD Bets on Hungary to Shield Its Margins as Tariffs and a Domestic Price War Bite

BYD sells more electric cars than any other manufacturer on the planet, yet its stock trades 34% below the record high set in July 2025. That chasm between production prowess and investor sentiment captures a dilemma that has defined the Chinese automaker for months: record volume meets shrinking profit. The latest closing price of €9.82 puts the shares roughly 22% above the 52-week low of €8.03 touched on June 30, but the recovery is tentative at best. The stock still sits nearly 8.8% below its 200-day moving average of €10.66 and has shed about 28% over the trailing twelve months.

The root of the skepticism lies in two forces squeezing BYD from opposite directions. At home, China’s brutal price war has sliced net profit by 55.4% in the first quarter of 2026, to 4.08 billion yuan, on revenue of 150.23 billion yuan that fell 11.82% year on year. The full-year 2025 figures tell a similar story: revenue inched up just 3.46% while net profit tumbled 19% to 32.6 billion yuan and the net margin shrank from 5.2% to 4.1%. Across the industry, Chinese automakers saw their combined first-quarter profit drop 18% and their average margin thin to 3.2%. Even the home-market sales data is unforgiving: retail passenger-car sales plunged 23.2% in June, the eighth consecutive monthly decline, even as NEVs grabbed a record 62.8% of the market.

Meanwhile, the export avenue that BYD has been counting on to restore margins is itself closing. The European Union’s tariffs on Chinese-made EVs already add about 17 percentage points to the base duty, and Brussels is now preparing supplementary levies on plug-in hybrids — precisely the segment BYD has used to circumvent the earlier tariff regime. Europe was a bright spot: sales rose 270% in 2025 to nearly 188,000 vehicles and were up another 144% through May 2026. In June alone, BYD exported 175,349 vehicles, a 95% surge that represented over 43% of its total monthly deliveries. But the math is shifting as tariffs eat into the margin advantage that made exports profitable.

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

BYD’s response is a strategic pivot toward local production, and the centerpiece is a €4 billion plant in Szeged, Hungary, slated to begin manufacturing in the fourth quarter of 2026. The factory is designed to put BYD inside the EU customs wall, dodging the tariffs that would otherwise erode its European margins. But the move comes at a cost: the company has shelved a previously announced factory in Manisa, Turkey, a project that had been in preparation for nearly two years and that had already triggered the cancellation of tax incentives by Turkish authorities. The Szeged plant, initially limited to an output of just tens of thousands of vehicles, still falls far short of covering BYD’s European ambitions, and scaling up will take time and further capital.

The market appears to recognize both the promise and the constraints. With an RSI of roughly 59 and annualized volatility above 40%, the stock is in a zone that signals neither panic nor euphoria — just watchful uncertainty. The short-term technicals have improved: the shares are trading just above their 50-day moving average of €9.67 after gains of 4.57% over the past week and 6.02% over the past month. Yet the longer-term picture remains clouded. At €9.82, the market capitalisation stands at about €86.5 billion, a level that values volume leadership but not yet the profit recovery investors want to see.

BYD is also betting on technology to change the narrative. The company has confirmed that its next-generation sulfide-based solid-state batteries have reached a “critical stage,” with pilot production targeted for 2027. That timeline pushes any payoff well into the future, and for now the immediate catalyst rests on whether the Hungarian factory fires up on schedule. If BYD can deliver “Made in Europe” by the fourth quarter of 2026, it will have a tariff-free escape route that the Turkish deal never could have provided. Until then, the company remains stuck between domestic price wars that should be easing and international trade barriers that are not.

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