China’s BYD aims to sell up to 1.6 million vehicles abroad in 2026, Citi says
![Item 1 of 2 A BYD Song Pro electric vehicle is displayed during the launch event of Chinese electric vehicle (EV) maker BYD in Buenos Aires, Argentina, October 8, 2025. REUTERS/Alessia Maccioni/File Photo [1/2]A BYD Song Pro electric vehicle is displayed during the launch event of Chinese electric vehicle (EV) maker BYD in Buenos Aires, Argentina, October 8, 2025. REUTERS/Alessia Maccioni/File Photo Purchase Licensing Rights, opens new tab](/_next/image?url=https%3A%2F%2Fwww.reuters.com%2Fresizer%2Fv2%2FLZZ26WJYGZMIHOM566OJ5RXH4Q.jpg%3Fauth%3D9ae645919083c502d87636dd6b96629a3560de8246b9b3f9976c9997331fa039%26width%3D1200%26quality%3D80&w=1920&q=75)
News Summary
Chinese electric vehicle (EV) giant BYD aims to achieve overseas sales of 1.5-1.6 million vehicles in 2026, a significant increase from an estimated 900,000 to 1 million units in 2025, according to a Citi report citing BYD management. This ambitious growth is primarily fueled by new model launches. Citi's report indicates that BYD's 2025 overseas sales mix is balanced, with Europe, North America, and ASEAN each accounting for one-third. The company's management expects capital expenditure to decline in the fourth quarter and significantly in 2026, as vehicle and battery production capacity is deemed sufficient to meet demand. Despite BYD reducing its overall 2025 sales target by 16% to 4.6 million vehicles due to recent domestic sales declines, its overseas shipments have already constituted 20% of total sales year-to-date, double the 2024 level. BYD is actively expanding its global manufacturing footprint, with factories under construction in Hungary and Brazil, and plans for a third European plant, with Spain as a leading candidate.
Background
BYD (Build Your Dreams) is a leading Chinese electric vehicle (EV) manufacturer renowned for its battery technology and vertically integrated supply chain. In recent years, the company has aggressively pursued international market expansion, driven by intense domestic competition and the pursuit of new growth avenues. This ambitious overseas sales target comes amidst recent challenges in its home market sales. Globally, the EV market is highly competitive, with geopolitical factors increasingly influencing supply chains and market access. The incumbent US President Donald J. Trump's administration continues to champion
In-Depth AI Insights
Q: How can BYD achieve its ambitious overseas expansion targets, particularly in the face of global trade protectionism, especially under President Trump's administration in the US? - BYD's strategy appears to involve circumventing tariff barriers through localized production, exemplified by its factories in Hungary, Brazil, and the planned Spanish facility. This helps to 'nationalize' its products and mitigate the 'Made in China' label. - In the North American market, while the Biden administration already favored local production through subsidies, a Trump administration's trade protectionism could be more severe. BYD might need to consider joint ventures or deeper collaborations with local entities to meet stricter localization requirements. - Europe and ASEAN markets are likely to be more accessible focus areas in the short term. Successfully establishing a third European factory would further solidify its regional supply chain and market share. Q: What do the significantly declining capital expenditures imply for BYD's future innovation and competitiveness? Does this signal a strategic shift? - A decline in CapEx typically indicates that existing production capacity is sufficient for short-term demand, or that the company is shifting from aggressive expansion to optimizing operations and improving efficiency. This could enhance cash flow and profitability. - However, in the rapidly evolving EV industry, sustained investment in R&D and innovation is crucial. If the CapEx reduction unduly impacts the development of new technologies or upgrades to production processes, it could erode long-term competitiveness. - This might also suggest BYD is reallocating resources from manufacturing to sales networks, brand building, and refining its global service infrastructure to support its overseas sales growth. Q: Despite declining domestic sales, BYD is doubling its overseas sales target. What long-term assessment of the Chinese domestic EV market does this reflect from the company? - This strategy suggests BYD likely perceives the Chinese domestic EV market as having entered a 'red ocean' phase of intense competition, with limited growth potential and pressure on profit margins. Shifting growth focus overseas is a necessary move to seek higher profitability and broader market access. - The domestic sales decline may accelerate the company's 'go global' initiative, diversifying risk and leveraging its cost control and technological integration advantages to find new growth points worldwide. - This strategic pivot also reflects the broader Chinese government policy encouraging enterprises to 'go out' and the ambition of the Chinese EV industry to secure a higher position in the global industrial chain.