BYD Battery Business Valued at Nearly Entire Company Worth, Bernstein Says

Bernstein Sees Hidden Value in BYD’s Battery Empire

Bernstein analysts have issued a strong buy recommendation for Chinese automaker BYD, arguing that the market dramatically undervalues the company’s battery business. The investment firm maintains that BYD’s battery segment alone is worth nearly as much as the entire company’s current market valuation, creating what they see as a significant opportunity for investors. This assessment comes as BYD solidifies its position as the world’s second-largest battery manufacturer for electric vehicles, shipping 70% more batteries than the third-largest competitor.

The Bernstein report, which sets a price target of 130 Hong Kong dollars ($16.67) approximately 30% above recent trading levels, highlights how investor focus on BYD’s automotive division has overshadowed its rapidly expanding battery operations. This oversight persists despite the battery division accounting for over 10% of company revenue last year with projections to reach mid-teen percentages this year.

Eunice Lee, the Bernstein analyst behind the call, emphasized that the market largely treats BYD merely as a Chinese EV maker while heavily discounting its broader portfolio. Her analysis suggests the battery business alone approaches the company’s entire enterprise value, implying investors essentially receive the automotive, electronics, semiconductor, and other segments at little to no incremental cost.

Battery shipments grew 47% last year and are projected to increase another 35% this year, driven by both internal demand and surging external sales to other automakers. This growth trajectory has positioned BYD’s battery division as a potential standalone powerhouse that merits reassessment by investors seeking exposure to the energy storage revolution beyond traditional automotive plays.

From Cellphones to Cars: BYD’s Battery Origins

BYD’s journey began in the 1990s as a manufacturer of cellphone batteries, long before the company entered the automotive sector in 2003. This foundation in battery technology provided the company with critical expertise that would later prove decisive in the electric vehicle revolution. While many traditional automakers scrambled to secure battery supplies from specialized manufacturers, BYD leveraged its decades of experience to develop proprietary technology in-house.

The company’s transition from consumer electronics batteries to automotive power sources represented a strategic pivot that has paid enormous dividends. Unlike competitors who remained dependent on third-party battery suppliers, BYD maintained control over this critical component from its earliest days of vehicle production. This vertical integration became increasingly valuable as battery shortages and supply chain disruptions plagued the broader automotive industry.

BYD Senior Vice President Lian Yu-bo highlighted this strategic advantage when discussing the company’s joint venture with Toyota, noting the combination of BYD’s development strengths and competitiveness in the battery electric vehicle market with Toyota’s renowned quality and safety technology. The partnership, established in 2020, underscores how major automakers recognize BYD’s battery leadership.

The company’s battery expertise has evolved beyond simple manufacturing into comprehensive research and development capabilities. BYD now designs and produces battery cells, modules, and packs tailored specifically to different vehicle architectures and performance requirements. This flexibility allows for faster innovation cycles and cost reductions that competitors struggle to match when working with external suppliers.

The Blade Battery Revolution

The centerpiece of BYD’s battery technology is the Blade battery, launched in 2020 within the company’s sporty Han sedan. This lithium iron phosphate (LFP) battery represented a significant advancement in safety, durability, and cost-efficiency compared to conventional nickel-manganese-cobalt chemistries. The Blade battery’s design features elongated, blade-like cells that can be arranged in a dense pack configuration, improving energy density while maintaining safety advantages.

The Blade battery addresses one of the primary consumer concerns regarding electric vehicles: fire risk. Through rigorous testing, including nail penetration tests that typically cause thermal runaway in conventional batteries, the Blade battery demonstrated exceptional stability. This safety performance has become a key selling point for BYD vehicles in markets where consumers remain cautious about battery technology.

Bernstein analysts noted that this safety-focused technology helped propel BYD to leadership in EV sales, finally surpassing Tesla in total electric vehicle deliveries. The Blade battery’s cost advantages also enabled BYD to offer competitive pricing without sacrificing margins, a critical factor in the increasingly price-sensitive Chinese electric vehicle market.

BYD produces these batteries entirely in-house through its subsidiary FinDreams Battery, which operates multiple manufacturing facilities. This internal production eliminates dependence on major battery suppliers like CATL or LG Energy Solution, giving BYD greater control over its supply chain and the ability to innovate faster than competitors constrained by supplier relationships.

Expanding Beyond Automotive: Energy Storage Systems

Beyond powering vehicles, BYD has begun applying its battery expertise to the rapidly growing energy storage sector. In September, the company revealed a utility-grade energy storage system based on Blade battery technology, called “Haohan.” Bernstein analysts pointed out that this new system costs less to manufacture than competing solutions, positioning BYD advantageously in a market poised for exponential growth.

BYD’s battery shipments to energy storage systems more than doubled last year, demonstrating strong demand for grid-scale storage solutions. As renewable energy deployment accelerates worldwide, the need for storage systems to stabilize intermittent power generation creates a substantial market opportunity for battery manufacturers with proven technology and cost advantages.

The energy storage business represents a natural extension of BYD’s capabilities and diversifies its revenue streams beyond the competitive automotive sector. Utilities and grid operators increasingly seek reliable, cost-effective storage solutions to manage renewable energy integration, frequency regulation, and peak demand management. BYD’s established battery production capacity and R&D infrastructure provide significant advantages in capturing this growing market.

Bernstein’s analysis highlights BYD’s leading rankings in both cell shipments and system integration for energy storage, with additional upside potential from emerging technologies like sodium-ion batteries. This positioning in the structural growth of energy storage represents another dimension of the company’s value that may not be fully reflected in current market valuations.

External Battery Sales Drive Growth

While approximately half of BYD’s battery production powers its own vehicles, the rapidly growing external sales segment has captured analyst attention. Bernstein reported that battery shipments to external automakers nearly tripled last year, with Xiaomi and XPeng each accounting for 25% of BYD’s external EV battery shipments. Toyota has also emerged as a significant customer, benefiting from the joint development agreement established in 2019.

This growing customer base validates BYD’s battery technology beyond its own vehicles and creates a scalable business model less dependent on automotive market cycles. As more automakers seek reliable battery suppliers amid global shortages, BYD’s established production capacity and competitive pricing position it to capture significant market share.

Toyota Executive Vice President Shigeki Terashi characterized the relationship as a collaboration between “teammates” putting aside rivalry to promote widespread adoption of electrified vehicles. This partnership between the world’s largest automaker and China’s leading EV producer signals growing recognition of BYD’s battery capabilities across the global automotive industry.

Recent reports suggest Ford Motor is in talks to purchase BYD batteries for some hybrid vehicles outside the United States. While neither company has confirmed these discussions, a Ford spokesperson acknowledged the company engages with many potential partners. This development underscores how traditional automakers increasingly look to Chinese battery suppliers to meet their electrification goals.

Vertical Integration Creates Competitive Moat

BYD’s business model extends far beyond battery manufacturing into comprehensive vertical integration across the entire value chain. The company controls nearly every aspect of production, from raw material extraction to software development, creating operational efficiencies and cost advantages that competitors struggle to replicate.

This integration begins with mining operations, as BYD has forged long-term partnerships and acquired stakes in mining companies to secure stable supplies of lithium and other critical materials. Recently, BYD acquired mineral rights for two plots in Brazil’s lithium-rich Jequitinhonha Valley, spanning 852 hectares in an area often referred to as Brazil’s “Lithium Valley.” This direct access to raw materials insulates the company from price volatility and supply disruptions that plague competitors dependent on commodity markets.

After raw material extraction, BYD processes these materials through its subsidiary FinDreams, which operates facilities dedicated to transforming lithium into battery-grade chemicals. Having internal refining capabilities guarantees quality control, reduces dependency on external processors, and enables faster response to demand surges. This comprehensive supply chain control became particularly valuable during the global semiconductor shortage, which BYD navigated more successfully than many competitors.

BYD established BYD Semiconductor in 2004, anticipating the growing importance of chips in automotive applications. The division produces semiconductors for battery management systems, motor controllers, and smart cockpit functions. By controlling chip design and production internally, BYD reduces exposure to shortages and can tailor hardware to perfectly integrate with its software, offering superior performance and functionality.

Manufacturing Scale and Global Expansion

BYD’s manufacturing capabilities extend across multiple “mega-factories” in China, where different vehicle components are assembled in unified facilities. This concentrated production approach improves efficiency and reduces transportation costs between suppliers. The company operates facilities in Xi’an, Changsha, and Shenzhen, demonstrating its ability to scale production to meet growing demand.

In 2024, BYD delivered over 4.27 million new energy vehicles, marking a significant increase from the previous year. This momentum continued into 2025, with nearly 1 million NEV sales in the first quarter alone, representing a 60% year-over-year increase. This remarkable growth trajectory underscores BYD’s ability to execute on its ambitious expansion plans.

The company has begun extending this manufacturing model internationally, breaking ground on its first European passenger vehicle factory in Szeged, Hungary, in 2024. This facility will shorten delivery times to European customers and localize production to navigate potential trade barriers. The factory represents part of BYD’s broader strategy to establish manufacturing presence in key markets rather than relying solely on exports from China.

BYD has also invested heavily in logistics capacity, operating its own fleet of roll-on/roll-off ships to transport vehicles globally. The company recently unveiled “The BYD Shenzhen,” the world’s largest vehicle carrier capable of transporting 9,200 vehicles. This control over distribution channels insulates BYD from shipping shortages and provides greater flexibility in managing international deliveries.

Competitive Landscape and Market Position

The electric vehicle market has become increasingly competitive, particularly in China where dozens of manufacturers vie for market share. However, BYD has emerged as the clear leader, surpassing Tesla in total electric vehicle sales and claiming the top position as China’s best-selling car brand with over 2.4 million new registrations. This achievement displaced Volkswagen, which had held the title for over 15 years.

According to the International Energy Agency, BYD and Tesla together account for 35% of all electric car sales globally, more than all major carmakers outside China combined. This duopoly reflects the significant advantages of scale and technology that both companies have established in the rapidly evolving market. BYD’s 20% share of global electric car markets (including both battery electric and plug-in hybrid vehicles) positions it as a dominant force in the industry’s transition away from internal combustion engines.

The competitive intensity has led to price compression across the Chinese market, with BYD reducing model prices by 10-20% to maintain momentum. While this pressure impacts margins, BYD’s vertical integration provides cost buffers that less integrated competitors lack. Approximately one-third of Chinese carmakers met their sales targets in 2023, with BYD among the successful companies while several rivals fell short for consecutive years.

Bernstein analysts predict 10% growth in domestic vehicle sales this year to 5.4 million units, along with a 4.4% increase in overseas sales to 1.5 million units. These projections come against a backdrop of expected overall market growth of just 1% in China, indicating BYD’s ability to capture market share from competitors. The China Association of Automobile Manufacturers forecasts new energy vehicle sales climbing by 15.2% this year, with exports up by 4.3%.

Valuation Perspectives and Investment Considerations

BYD’s market capitalization stands at approximately $115 billion, more than double that of Ford Motor at $55 billion, a remarkable reversal from a decade ago when Ford vastly outvalued the Chinese company. Despite this impressive growth, Bernstein’s analysis suggests the battery segment alone could be worth $110 billion, implying the automotive and other businesses are valued at minimal levels in current market pricing.

Some valuation metrics present a more complex picture. Simply Wall Street analysis indicates BYD trades at a price-to-earnings ratio of 20.2x, higher than the peer average of 8.8x and above an estimated fair P/E of 14x. This premium valuation reflects market expectations for continued growth but also creates vulnerability if earnings disappoint. However, discounted cash flow models suggest BYD trades 17.7% below estimated fair value, creating a divergence between different valuation methodologies.

TipRanks-PerPlexity upgraded the stock to Buy with a HK$106 price target, while Bernstein’s HK$130 target represents approximately 30% upside from recent levels. These projections rest on anticipated near-term catalysts from battery electric vehicle and battery technology upgrades, alongside multiple product launches expected throughout the year. Bernstein noted BYD is slated to launch at least 10 new automotive models this year, providing multiple potential catalysts for stock performance.

Challenges remain, including potential trade barriers as Chinese automakers expand internationally and the risk of slowing growth in key markets. The European Union has launched an anti-subsidy investigation on EV imports, with possible new tariffs from July 2024. Additionally, the United States maintains high import taxes of 27% on Chinese vehicles, limiting direct market access in that critical market.

The Bottom Line

• Bernstein maintains an outperform rating on BYD with a HK$130 price target, approximately 30% above current levels
• BYD is the world’s second-largest battery manufacturer for EVs, shipping 70% more batteries than the third-largest player
• The battery segment alone is worth nearly as much as the entire company’s market valuation according to Bernstein analysis
• Battery shipments grew 47% last year with projected 35% growth this year
• External battery sales nearly tripled last year, with Xiaomi and XPeng each accounting for 25% of external EV battery shipments
• The Blade battery technology provides safety advantages and cost efficiency that helped BYD surpass Tesla in EV sales
• BYD delivered over 4.27 million NEVs in 2024, with first quarter 2025 sales up 60% year-over-year
• Vertical integration across mining, refining, battery production, semiconductors, and vehicle manufacturing creates competitive advantages
• Energy storage systems represent a growing business segment with shipments more than doubling last year
• BYD operates its own fleet of vehicle transport ships and is building factories internationally to support global expansion