Bernstein Issues Buy Signal: BYD’s ’Undervalued’ Battery Unit Presents Rare Opportunity

Analysts at Bernstein just flashed a buy signal on BYD. Their reasoning? The market's asleep at the wheel on the company's battery division.

The Hidden Engine

While everyone's fixated on EV sales figures, Bernstein's team is pointing to the power unit under the hood—literally. They argue the standalone value of BYD's battery business isn't priced into the stock. It's a classic case of the sum being greater than its parts, if only Wall Street would do the math.

Valuation vs. Reality

The call hinges on a disconnect. The current share price reflects the auto maker, not the energy titan it's becoming. As one analyst put it, you're buying a battery giant and getting the car company for free—a notion that would give most traditional auto CFOs heartburn, but then again, they're still figuring out their software margins.

The Bottom Line

This isn't just about catching up to Tesla. It's about recognizing a vertically integrated behemoth that controls its own destiny from raw materials to finished vehicle. Bernstein's move suggests the street's myopic focus on monthly delivery numbers is missing the forest for the trees. Sometimes the best trade is spotting the asset everyone else forgot to value—right before they remember it exists and scramble to pay up.

BYD batteries attract Ford, Xiaomi, and XPeng

The report said BYD shipped 47% more batteries in 2023 than the year before. This year, shipments are expected to grow another 35%.

More than half of those batteries stayed in-house, used in the company’s own vehicles. That saves them money and gives them more control over production.

The rest went out to companies like Xiaomi, XPeng, and Toyota. Bernstein broke it down even further: Xiaomi and XPeng each made up 25% of BYD’s external battery deliveries.

There’s more. According to the Wall Street Journal, Ford is now in talks with BYD to supply batteries for future hybrid vehicles. BYD didn’t confirm. “We talk to lots of companies about many things. We don’t comment on rumors and speculation about our business,” a Ford spokesperson allegedly said when asked.

Still, if Ford goes forward with it, that WOULD be a big U.S. brand tapping into BYD’s battery supply line.

Bernstein says BYD is the second-largest battery Maker in the world when measured by EV battery installations. They shipped 70% more than whoever was in third place. The firm says the battery division alone could be worth $110 billion, almost equal to the company’s current market value of around $115 billion. That’s more than double Ford’s current market cap of $55 billion, by the way.

Revenue from selling batteries to outside clients was more than 10% last year, and Bernstein thinks that could MOVE into the mid-teens in 2024.

On the car side, the firm sees 10% domestic growth for BYD, or 5.4 million units, and 4.4% growth in exports, reaching 1.5 million. China’s total car market, according to the country’s auto group, is only expected to grow 1%, while new energy vehicles (which includes full-electric and hybrid) are expected to climb 15.2%.

Bernstein slapped a price target of 130 Hong Kong dollars on BYD stock, or about $16.67. That’s around 30% higher than where it closed last Friday. The analysts expect at least 10 new BYD models this year. They also see big movement coming from “upcoming battery electric vehicle and battery technology upgrades.”

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