Samer Choucair: BYD Is Shifting the Battle for Profitability From China to Global Markets
BYD returned to net-profit growth in the second quarter of 2026 after five consecutive quarters of declines, with profit rising approximately 30% to RMB 8.2 billion, exceeding Bloomberg expectations of around RMB 8 billion.
Samer Choucair said the improvement was not driven by a strong recovery in Chinese demand, but rather by a shift in the company’s revenue mix. Exports climbed to approximately 44% of sales during the first half of the year, while overseas revenue exceeded half of total revenue for the first time.
Profitability Is Shifting From Scale to Geography
Investment entrepreneur Samer Choucair said BYD’s results demonstrate that the profitability equation is moving “from scale to geography.” Quarterly revenue declined 3% to RMB 194.6 billion despite the increase in earnings, with profitability supported by stronger overseas sales and a greater contribution from higher-priced models.
Choucair said the first half nevertheless remained heavily affected by China’s electric-vehicle price war. Revenue declined 7.1% to RMB 344.8 billion, while net profit fell 20.5% to RMB 12.3 billion. At the same time, gross margin improved to 18.85% from 18.01%, while operating cash flow increased to RMB 37.3 billion from RMB 31.8 billion.
For investors, Choucair said the divergence between revenue and profitability is particularly important because it suggests that BYD’s next stage of value creation may depend less on maximizing domestic unit volumes and more on improving the geographic and product mix of those sales.
Exports Are Offsetting Weakness in China
Samer Choucair noted that sales of new-energy vehicles declined 15.7% to 1.81 million units during the first half of the year. However, the contraction slowed to 3.2% in the second quarter, compared with a decline of more than 30% in the first quarter.
Exports moved sharply in the opposite direction, reaching approximately 792,000 vehicles, an increase of 68%. Overseas sales during the second quarter climbed to around 471,000 units, representing growth of more than 82%.
Choucair said weaker domestic demand, increasing saturation of the Chinese market, and the continuing price war are pushing automakers to redirect excess production capacity toward Europe, Southeast Asia, Latin America, and the Gulf, where electric-vehicle penetration remains lower and pricing pressure is generally less intense.
That transition effectively changes the strategic purpose of exports. They are no longer simply an additional source of volume but increasingly represent a mechanism for protecting margins and monetizing manufacturing capacity that would otherwise face intense competition in the domestic Chinese market.
Europe Puts Localization to a New Test
Samer Choucair said exports have improved BYD’s margin profile but have simultaneously opened a new trade-policy front, particularly as Europe imposes tariffs on Chinese electric vehicles.
BYD is preparing to begin vehicle assembly at its Szeged plant in Hungary during the fourth quarter of 2026, with initial targeted capacity of approximately 200,000 vehicles.
Choucair said the sustainability of BYD’s overseas profitability will increasingly depend on whether the company can localize production, navigate tariffs, and preserve its cost advantage at the same time.
Overseas revenue increased 34% to RMB 181.3 billion, representing approximately 53% of total revenue for the first time.
For institutional investors, the shift is significant because BYD’s international expansion is evolving from an export strategy into a localization strategy. Manufacturing closer to end markets can reduce tariff exposure and potentially shorten supply chains, but it also requires capital expenditure, local supplier development, regulatory compliance, and effective management of higher-cost operating environments.
The Gulf Is Becoming a Localization Opportunity
Samer Choucair said the Gulf, despite being relatively small compared with China or Europe, represents an important test of this strategy.
Electric vehicles account for approximately 5% of new vehicle sales in Saudi Arabia, while Vision 2030 is seeking to establish a domestic automotive value chain through investments involving Lucid, Ceer, and Hyundai.
Choucair said BYD’s entry into Saudi Arabia, the expansion of its distribution network, and its technical cooperation with Aramco create an opportunity to participate in the Kingdom’s industrial diversification.
However, he stressed that regional investment institutions are likely to place greater strategic value on localization in batteries, components, manufacturing, and research and development than on simply increasing vehicle imports.
For Saudi Arabia and the wider Gulf, the investment opportunity therefore extends beyond selling electric cars. The larger question is whether international manufacturers can contribute to domestic industrial capacity, technology transfer, skilled employment, battery infrastructure, charging networks, and local supply chains.
Investors Are Repositioning Their Bets
Samer Choucair said BYD’s latest results are reshaping the investment case across three interconnected areas: Asian manufacturing equities, battery and critical-mineral supply chains and logistics, and European automotive companies facing intensifying pricing pressure.
Choucair also highlighted BYD’s research and development expenditure, which reached RMB 28.9 billion over six months while operating cash flow improved.
Meanwhile, the company’s higher-priced Tengshi, Denza, and Yangwang brands recorded combined growth of approximately 61%, increasing their share to 12.8% of passenger-vehicle sales.
That premiumization strategy could become increasingly important to the investment case. If BYD can move beyond competing primarily on price and increase the contribution of higher-margin vehicles, software, batteries, and services, its earnings profile could become less dependent on the increasingly competitive mass-market EV segment.
For institutional capital, this makes the composition of growth more important than headline unit sales alone.
Risks and Opportunities
Samer Choucair identified continued revenue weakness, European tariffs, currency volatility, and the challenge of reaching the company’s annual sales target of between 5 million and 5.5 million vehicles as major risks.
Potential shortages involving the next generation of Blade Battery technology could also become a bottleneck as the company attempts to scale internationally.
At the same time, Choucair sees investment opportunities extending beyond vehicle manufacturing into batteries, charging infrastructure, software, fleet services, and potential manufacturing and localization partnerships across the Gulf.
The central risk is that international expansion may become more capital-intensive precisely as competition intensifies. Building factories, distribution networks, service infrastructure, and localized supply chains across multiple jurisdictions could increase fixed costs and execution complexity.
The opportunity, however, is equally significant. If BYD can reproduce its manufacturing efficiency internationally while reducing its dependence on China’s highly competitive domestic market, its addressable market and earnings base could become substantially more diversified.
The Strategic Outlook
Samer Choucair concluded that BYD should no longer be viewed simply as a bet on the growth of electric vehicles in China. It is increasingly becoming a test of whether Chinese manufacturing leadership can transform excess domestic production capacity into sustainable global cash flows.
“Institutional capital is no longer buying only the narrative of leadership in China,” Choucair said. “It is buying the ability to convert that leadership into geographically insulated cash flow.”
For investors, that distinction could become central to BYD’s future valuation. A company dependent primarily on Chinese vehicle volumes would remain heavily exposed to domestic price competition, market saturation, and policy dynamics. A geographically diversified manufacturer with localized production, stronger premium brands, battery technology, and international distribution could command a fundamentally different investment profile.
According to Samer Choucair, the remainder of 2026 will therefore provide an important test. If BYD can sustain improvements in its geographic sales mix and margins while successfully expanding production outside China, the market may increasingly have to decide whether to value it primarily as a major Chinese automaker or as an emerging global manufacturing and export platform.