BYD’s Stock Slump: A Year-End Sales Collapse Mars Its Victory Over Tesla

A significant shift in the electric vehicle (EV) landscape has occurred, with China's BYD officially surpassing Tesla in annual sales of pure battery-electric cars for the first time. However, this milestone has been completely overshadowed by a severe and unexpected downturn in December sales, sending shares tumbling and raising fundamental questions about the sustainability of the company's long-running growth narrative.

Beyond the immediate sales figures, investor anxiety is increasingly focused on BYD's earnings potential. Market analysts are paying close attention to the financial impact of a major recall involving 115,000 Tang and Yuan Pro vehicles initiated last October. The expenses associated with this corrective action, coupled with likely increased spending on quality assurance measures, are expected to negatively affect the upcoming quarterly financial report. When combined with the sharp volume drop from December, these factors create a dual threat to the company's profit margins.

The contrast with its key rival is telling. Tesla's recent sales decline is often attributed to saturation in the premium EV segment. BYD's situation, however, suggests emerging headwinds in the core Chinese mass market it dominates. Elevated inventory levels ahead of the Lunar New Year holiday could exacerbate existing price pressures, further squeezing profitability.

December Data Triggers a Market Sell-Off

While the full-year 2025 results appear strong on paper—with 2.26 million battery-electric vehicles (BEVs) sold, handily beating Tesla's 1.64 million units—financial markets are reacting to more recent momentum, and it is decisively negative. The trigger was an alarming year-end collapse. In December, total vehicle sales fell by 18% year-over-year to approximately 420,000 units.

Should investors sell immediately? Or is it worth buying BYD?

More concerning for the core business is that the pure-electric segment itself contracted for the first time in 2025, declining by 8.2%. The usually robust plug-in hybrid category was hit even harder, plummeting by over 25%. Industry observers interpret this sudden weakness as evidence that the aggressive price wars of recent months may have exhausted consumer demand earlier than anticipated.

This disappointing data prompted a swift market reaction. BYD's stock listed in Hong Kong dropped roughly 3%, falling to HKD 95.80 per share.

Investor Focus Shifts to Management and Key Levels

All eyes are now on the company's management and its detailed financial results due later this month. The leadership faces mounting pressure to convincingly frame the December slump as a temporary setback rather than a structural slowdown, aiming to rebuild confidence in its 2026 growth prospects.

From a technical analysis perspective, the breach of the psychologically important HKD 100 level has already weakened the stock's position. Should the current negative sentiment persist, the next critical test for the share price will likely be the support zone around HKD 92.