BYD (002594.HK) Selloff Erodes $60B as China EVs Face Profit-Cutting Pressure

BYD Co. (002594.HK) is experiencing a sharp selloff as cooling domestic demand and surging raw material costs drive a reset in profit outlooks for China’s electric-vehicle sector. Hong Kong-listed shares have lost more than $60 billion in market value this year, with BYD’s domestic January deliveries down 50% to 109,569 units. Sales weakness and cost inflation—lithium, copper, and memory chips up over 100%—are pressuring margins, with some mass-market EVs facing an additional $1,000 per unit in costs. Most local automakers expect first-quarter volumes to drop 30–40% from the December quarter. Bearish positioning in the Hang Seng Tech Index has diverged from the broader Hang Seng, and Nio (0986.HK) posted its first quarterly profit in Hong Kong on Friday. BYD trades at about 16x forward earnings, below its 3-year average of 18x. Analysts caution on earnings downgrades and margin pressure, keeping most investors on the sidelines for now.