BYD (BYDDF): Don't Blink or You Might Miss Them Become the World's Largest Automaker

Wang Chuanfu One of Histories Best CEO's

As of 1/11/26 this is about 10% of my portfolio. This is not financial advice. Do your own research. Investing in stocks is risky.

The Prediction: In 7 to 10 years, BYD (BYDDF) will surpass Toyota to become the largest automaker in the world by volume.

If that sounds impossible, look at the last six years. In 2020, BYD was a regional player selling roughly 400,000 vehicles a year. Most western investors had never heard of them. Fast forward to the end of 2025: BYD just closed the year with 4.6 million vehicles sold globally (63% annual CAGR). That is more than a 10x increase in six years. More importantly, they officially took the crown for fully electric vehicles (BEVs), selling 2.26 million units in 2025 compared to Tesla’s 1.64 million.

It seems certain most cars will be fully electric in our lifetime maybe not anytime soon especially in the United States but as Bob Dylan would say “The times they are a changing”. As the EV King BYD is in prime position to take the overall title. While the US market debates whether EVs are “viable,” BYD keeps extending their lead.

How do they get from 4.6 million to overtaking Toyota’s 11 million? The thesis rests on four pillars:

1. The CEO - Wang Chuanfu

2. True Vertical Integration

3. A Home Court advantage

4. The Math

Let’s break them down.

The CEO – Wang Chuanfu

If you’re going to become the largest automaker you are going to need competitive advantages over your competition. BYD has the ultimate advantage…..Wang Chuanfu. Charlie Munger once described Wang “He is a combination of Thomas Edison and Jack Welch something like Edison in solving technical problems, and something like Welch in getting done what he needs to do.”. Munger was able to convince Warren to buy 10% of the company or 223 million worth of share in 2008 which would grow to 9 billion by 2022. Now back to Wang…

Born into poverty in a farming village and orphaned as a teenager, Wang was raised by his older brother. He didn’t start as a businessman; he started as a chemist, studying metallurgical physical chemistry and specializing in battery technology. When he founded BYD in 1995, he didn’t have the capital to buy expensive automated assembly lines from Japan like his competitors. Instead, he reverse-engineered the process, breaking down complex automation into hundreds of manual steps that could be done by skilled workers with jigs. He cut capital costs to 1/5th of his competitors’ levels. By combining high-end chemistry with low-cost labor, he undercut the Japanese giants. By 2000, he became the first Chinese lithium-ion supplier for Motorola, and by 2002, he won Nokia. In less than a decade, the “orphan chemist” had captured over 50% of the global mobile phone battery market.

In 2003, Wang made a move that baffled the market when he used his battery profits to acquire a failing state-owned car manufacturer, Qinchuan Automobile, which was selling nearly zero cars at the time. Investors hated it, and the stock crashed 20% immediately as analysts called it a distraction. But Wang wasn’t building a car company; he was building a place to put his batteries. By 2009, his strategy seemed to be working sales had rocketed to roughly 450,000 vehicles. However, the company then hit a wall, with sales stagnating between 400,000 and 500,000 units for the entire next decade.

The next decade (2010–2020) was spent “building the iron moat” rather than chasing easy volume. Wang realized that to compete globally, his cars couldn’t just be cheap; they had to be desirable and safe. He hired Wolfgang Egger, the former Head of Design at Audi, to overhaul BYD’s styling. Simultaneously, his team engineered the “Blade Battery,” a proprietary LFP pack introduced in 2020 that was safer and cheaper than anything on the market. While sales were flat, the technology stack was becoming invincible.

In March 2022, Wang made his boldest move yet when he completely ceased production of internal combustion engine vehicles to go all-in on EVs and hybrids. Critics called it risky, but it ignited the most violent growth curve in modern auto history. In 2022, sales jumped to 1.86 million. In 2023, they hit 3 million. And by the end of 2025, they had scaled to 4.6 million vehicles, officially overtaking Tesla.

This duality is the company’s DNA. Wang still eats in the employee cafeteria and lives in company housing. He lives in the factory. While Western CEOs are often financial engineers managing stock buybacks, Wang is a literal engineer solving chemical bottlenecks. He has the technical brain to build the “Blade Battery” and the operational genius to take a company from 450,000 cars to 4.6 million in just five years.

To show just how exceptional BYD has been under Wang below is the 10 Year Revenue growth CAGR from 2012-2025 (2002 is the earliest financial data I have from the company). Never once dipping below 10% and currently over 25%. Very impressive.

Here is a link to all of the data if interested.

BYD1.xlsx

True Vertical Integration

In the brutal arithmetic of the competitive automotive industry, the lowest-cost producer wins. This is where BYD’s advantage becomes insurmountable. Most legacy automakers are essentially just “assemblers.” They design a car, bid out the parts to hundreds of suppliers like Bosch or Magna, and then bolt them together. This works fine for gas cars where the supply chain is mature. But in the electric age, where the battery alone accounts for roughly 40% of the vehicle’s cost, this model is outdated. BYD is not an assembler; they are a true manufacturer.

It starts with the battery. While competitors are writing massive checks to suppliers like CATL or LG Energy Solution paying a markup on the most critical component BYD builds their own. They are the world’s second largest battery company behind CATL their proprietary LFP “Blade Battery” is not just safer; it is structurally cheaper to produce because it eliminates the need for expensive nickel and cobalt. But the integration goes far deeper than just the power pack. In a move that looked redundant until the global chip shortage of 2021, BYD spent years building its own semiconductor division. When Ford and GM were parking thousands of unfinished trucks in fields because they couldn’t get chips, BYD kept the lines running because they manufacture their own insulated-gate bipolar transistors (IGBTs), the “CPU” of the electric motor.

This total control extends all the way down to the raw earth. BYD has secured its own lithium resources, taking stakes in mines in Africa and South America to insulate themselves from the wild price swings of the commodity market. They build the motors, the powertrain, the dashboard electronics, and the software. By controlling the entire stack from the mine to the showroom, BYD captures the profit margin at every single step that Western automakers surrender to suppliers. This is the mathematical reason why, when the EV price wars began, BYD could slash prices to gain market share and still remain profitable, while companies like Ford reported losses of tens of thousands of dollars on every electric vehicle sold.

In January 2024, BYD closed the final loop in their supply chain by launching their own shipping fleet with the maiden voyage of the Explorer No. 1. While other exporters were at the mercy of skyrocketing charter rates and shipping bottlenecks, BYD was building a private navy. By October 2025, they had completed a fleet of eight massive roll-on/roll-off (Ro-Ro) vessels, including the BYD Shenzhen, the world’s largest car carrier capable of holding 9,200 vehicles. This fleet gives them an annual export capacity of over 1 million vehicles, insulating them from logistics costs and ensuring they can flood markets like Brazil and Europe regardless of global shipping constraints. They don’t just build the car; they own the mine it came from and the ship it arrives on.

The Home Court Advantage

The simple reason BYD will become the world’s largest automaker is simple geography: they dominate the world’s largest car market. China buys roughly 32 million cars a year double the size of the US market. It is statistically probable that the world’s largest automaker will eventually come from the world’s largest market, just as GM dominated when the US was king.

But there is also a huge cultural tailwind. The United States is voluntarily forfeiting the race. Culturally, a huge portion of the US population is not interested in driving or owning anything “electric” especially electric vehicles. My dad and brother share this sentiment and have both said “I’d never buy that electric shit.”. This is obviously anecdotal evidence, but Ford just cancelled their fully electric F-150 citing customer demand. I think most of rural America could’ve told them that in 4 seconds and saved them billions of dollars.

While the US fights a culture war over engines, the Chinese government has made buying a gas car financially painful. The state has effectively stacked the deck to ensure mass adoption. They recently extended the NEV purchase tax exemption through 2027, which saves buyers roughly $4,200 upfront. More importantly, in major cities like Shanghai, a license plate for a gas car is auctioned and can cost over $12,000, whereas an EV license plate is free. On top of that, the government has launched an aggressive infrastructure plan to build a network of 28 million chargers by 2027, ensuring that range anxiety is virtually non-existent.

This alignment of culture and policy has pushed EV penetration in China past 50%. The Chinese consumer views EVs as superior tech, not a political statement. This gives BYD a massive, supportive home base to scale up revenue and R&D while US automakers struggle to sell EVs to a skeptical public. BYD has been given a massive head start in the EV race.

The Math

Let’s run the numbers for 2035.

China - The Chinese auto market is massive. In 2025 about 32 million cars were sold in China by 2035, as urbanization continues, we can estimate the total market size at 40 million vehicles.

EV Penetration: It is already at 50% today. By 2035, it is conservative to assume this reaches 90% as gas cars become obsolete niche products.

BYD Market Share: Currently, BYD dominates with market share of 27% the first 11 months of 2025. Let’s assume their share drops to a stable 20% as competition heats up.

The Math: 40 million total cars × 90% EV penetration = 37 million EVs. 20% Market Share for BYD = 7.4 million domestic sales.

(Global) - This is where the real upside lies. BYD has set an ambitious target of having half of their car sales outside of China by 2030. While ambitious I wouldn’t bet against BYD and Wang Chuanfu

If we assume internationally BYD can match domestic sales by 2035 that would be 7.4M vehicle sales. This seems like a massive jump but let’s not forget compound interest is the 8^th wonder of the world. With 1 million vehicle sales in 2025 this would be represent a 22% growth rate in international sales per year. In 2025 sales increased 150% and for 2026 they are projecting 50%. It won’t be easy, but it is possible to reach this goal.

Total Projection:

• Domestic: ~7.4 million

• International: ~7.4 million

• Total 2035 Sales: ~14.8 million vehicles

Toyota

Toyota is the current leader in the world with unit sales around 11 million globally. While this is a significant head start, their sales have basically been flat for the last six years, hovering between 10 and 11 million. This stagnation is a textbook example of “Counter Positioning” from Hamilton Helmer’s book 7 Powers. Toyota spent years fighting the EV transition to protect their profitable hybrid business, leaving them with no competitive electric offerings when the market shifted. As a result, they are now collapsing in China (their former growth engine), where sales dropped 12% recently as customers abandoned Toyotas for BYDs. To catch Toyota’s 11 million sales, BYD only needs a growth rate of just over 9% annually. Certainly achievable.

Risks

It is admittedly ironic that after spending the last paragraph discussing Toyota’s stagnation, they remain the single biggest risk to this thesis. Toyota is not a tech startup that can be bullied; they are a manufacturing powerhouse with deep pockets and political connections. They are finally waking up. Under new CEO Koji Sato, Toyota has announced plans to launch 10 new EV models and is aggressively funding solid-state battery research. If the global transition to EVs slows down or if hybrids remain the dominant technology for longer than expected Toyota’s “wait and see” strategy will look like genius, and BYD’s massive capacity expansion could turn into a financial burden.

Beyond the legacy giants, the geopolitical the tariff is real. The United States has effectively banned Chinese EVs with 100% tariffs, and the European Union has slapped duties ranging from 17% to 38% on them. However, BYD is already constructing massive manufacturing plants in Hungary and Turkey. By producing cars within the EU (Hungary) or in nations with customs unions with the EU (Turkey), BYD can skirt these tariffs entirely. If regulators close these loopholes, BYD’s international growth could be severely capped.

Finally, the war at home is brutal. The Chinese EV market is currently experiencing what they call “involution” (nei juan) intense, destructive competition where automakers slash prices to bleeding edge levels just to survive. Competitors like Geely, Xiaomi, and Tesla China are not rolling over. They are actively eroding market share and margins, and if BYD gets dragged into a perpetual price war, their profitability could evaporate even as their volume grows.

Conclusion

The transition to electric vehicles creates a new global hierarchy. The winners will be determined by three factors: battery technology, manufacturing scale, and cost discipline. BYD has a massive head start in all three.

The road to #1 won’t be easy. Geopolitical tensions, tariffs, and a waking giant in Toyota will inevitably create volatility. But betting against BYD right now is betting against the math. They have already won the home and EV market. They have surpassed Tesla in pure EV volume. The next decade is about exporting that dominance globally while the US and European markets struggle to catch up.

If the thesis holds, we aren’t just looking at a successful EV company; we are looking at the compounding machine that will define the next generation of the automotive industry.

Disclosure: At the time of this writing, I hold a long position in BYD (BYDDF). This article is for informational and educational purposes only and should not be construed as professional financial advice.

Investing in individual stocks involves significant risk, including the potential loss of principal. I am not a registered investment advisor or a broker-dealer. Readers should conduct their own due diligence or consult with a qualified financial professional before making any investment decisions. While I strive for accuracy, all data is provided “as is” and is subject to change without notice.