BYD shares are on track for their best month in over a year, as surging oil prices due to the Iran war brighten the outlook for electric vehicle sales.
The Hong Kong-listed stock is up nearly 12% in March, one of the top performers on the Hang Seng Tech Index along with EV peers Nio and Zhejiang Leapmotor Technologies.
The sector had slumped in recent months on worries over sluggish demand and tough price competition in China.
BYD’s guidance for the current year, along with its results due Friday, will provide clues for investors on the chances for an export-led recovery.
Its overseas sales for the first two months surged 50% from a year ago, and customer traffic has been brisk at its dealerships across Asia in March as gas prices climb.
“We’ve seen stories out of the Philippines and Indonesia where locals are queuing up to buy an electric vehicle,” said Leonid Mironov, a portfolio manager at Gavekal Capital.
“Longer term, this will help re-establish the EV narrative and consumer mindshare, especially in developed markets.”
Overseas sales accounted for about half of January-February sales volume for the Shenzhen-based automaker, which is also seeing a flood of orders from Central and South America.
Likely rollouts featuring BYD’s new proprietary charging technology may help speed EV adoption in foreign markets where charging speed and infrastructure remain key bottlenecks.
“Overseas expansion has become a necessity for Chinese automakers,” said Rosalie Chen, an analyst at Third Bridge.
BYD’s in-house battery production and cost advantages can help it achieve strong profitability on exports and “effectively capture demand shifts driven by rising oil prices.”
Challenges remain in the home market, which Chen described as “highly saturated”.
Discount battles with rivals and a tapering of stimulus from Beijing have dragged on the domestic business, with BYD poised to report its slowest annual sales growth in six years at 7.6% in 2025.
The automaker recently unveiled new models and more powerful batteries in a bid to reverse the China sales slump.
A domestic revival could provide more momentum for the stock, which is still down more than 30% from the all-time high set last May.
BYD shares rose as much as 4.7% Friday ahead of its earnings report due later.
“While BYD’s products are gaining recognition overseas, the company must also prove it can defend its domestic market share,” said Ming Lee, an analyst at BofA Securities.
“Store foot traffic has picked up following recent tech launches, but we are still waiting for clearer signs of sustained order recovery.”
Sceptics remain on BYD despite the market’s nascent enthusiasm, as seen in a spike in bearish positioning on the stock.
Its short interest as a per cent of free float has climbed to 3.8% from 0.7% at the start of the year, according to S&P Global data.
More bullish investors are looking for the start of a sustainable rebound, with a number of tailwinds.
The stock has been outperforming on “expectations of a sales recovery this year driven by new model launches, new technology unveiling and most important of all, continuing positive momentum in overseas markets,” said Kevin Net, head of Asian equities at Financiere de L’Echiquier.
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