The Real Logic Behind BYD’s Growth Stall

After BYD completed its share issuance in March, the stock climbed to new highs in May. But since then, the performance has appeared sluggish—almost sleepy—failing to maintain previous momentum.

Today, CATL’s market value is already double that of BYD, and BYD once again seems to be returning to a familiar battlefield: defending the 700-billion-RMB valuation threshold.

To be fair, directly comparing companies across entirely different sectors often lacks logical foundation—especially when even Foxconn Industrial Internet now sits above 1 trillion RMB in valuation.

Rather than repeating the common explanations—fierce price competition, shrinking margins, post-financing capital fatigue—we prefer not to waste time seeking excuses. Instead, we focus on the real strategic questions behind BYD’s trajectory.

Because fundamentally, BYD remains BYD. Its business foundation hasn’t dramatically changed. The real story lies behind two diverging strategic routes shaping the stock’s path.

1. A Fundamentally Solid Business

Nobody denies that fundamentals determine long-term performance. But in bull markets, fundamentals often serve simply as justification for upward sentiment.

BYD’s net profit declined year-on-year in Q2 and Q3, which could easily be explained by intensified competition and industry pressure. Yet at the same time, skyrocketing R&D spending and booming exports reveal strengthening internal capability. In bull markets, investors tend to tolerate—or fully ignore—temporary setbacks.

In philosophy, there’s the concept of “negation of negation”—three developmental stages: affirmation, denial, and then the synthesis. For automotive manufacturing, becoming a truly global OEM follows a similar progression: succeed in a niche market, broaden product categories, and ultimately integrate into a multinational car empire.

NIO, XPeng, and Li Auto are all in stage two—they’re now redefining themselves away from pure premium positioning toward broader mass-market lineups. Among them, XPeng is adapting most successfully so far, while Li Auto is meeting challenges.

BYD, however, has already entered stage three: multi-brand, full-segment global expansion. And this phase appears structurally stable with a high probability of success.

BYD began with mass-market consumer vehicles. Its second-stage milestone was attempting to redefine itself with luxury production. Many argue that Denza and Yangwang haven’t reached meaningful volume—but such expectations are unrealistic. Market-recognition of premium product identity takes time. Lexus, for instance, launched in 1987 and required nearly 40 years to reach its current reputation. In comparison, Denza and Yangwang are moving astonishingly fast.

Criticism of BYD’s marketing or brand personality often overestimates short-term sales and underestimates long-term technological weight. The foundation of automotive excellence has never been aesthetics or storytelling—but engineering. If I present you with quad-motor torque vectoring and electromagnetic suspension, and you counter with “artisan body lines and craftsmanship philosophy,” I can only politely smile and nod.

The real division behind BYD’s trajectory ultimately lies in two competing visions: the AI route vs. the new-energy route.

Put simply:
AI is about dividing the existing pie.
New energy is about making the pie larger.

2. Competing Routes: Where Does Profit Come From?

Every industry must return to the core question: Where does profit originate?

Critics say AI today lacks real monetization. But what about the internet boom of 1999-2000? How did that become profitable?

The three components of economic growth are labor, capital, and technological progress. Technological progress is fundamentally a transmission mechanism—it ultimately works through labor and capital.

The dot-com bubble, at its core, represented a transfer of economic rent within the capital ecosystem.

Retail rent was captured from real-estate landlords and redistributed to internet capital owners. Consumers and internet employees both benefited—but fundamentally, they were absorbing displaced land-based profit. It wasn’t just a digital revolution—it was a supply-chain recomposition. Online commerce eliminated physical retail rent, benefiting the entire economy—except commercial property holders.

The challenge is that AI today changes a different equilibrium: the relationship between skilled labor and capital.

A century ago, scientific management increased physical labor productivity by 50x. But knowledge-worker productivity—lawyers, accountants, analysts—has not enjoyed similar transformation.

Now AI is here, dissolving the moat of specialized knowledge.

Professions such as accountants, legal clerks, translators, administrative staff—and even parts of medical practice—are directly threatened.

Last time, wealth was extracted from land rent.
This time, it’s extracted from middle-class intellectual labor.

In the long term, technological progress will undoubtedly raise productivity. But in the medium term—perhaps even over the next decade—this shift is profoundly disruptive. Our social, cultural, and educational structures are not yet capable of absorbing this post-modern realignment.

As a result, the only clear AI winners today are the shovel-sellers—like NVIDIA.

Contrast this with the cryptocurrency sector, which—though disliked by traditional capital—operates with brutally simple economics.

USDT and Bitcoin represent a transfer of monetary sovereignty from peripheral economies to core monetary dominators. The current adopters are inflationary nations like Turkey and Argentina. But the true long-term targets are the Yen and Euro.

Musk’s Starlink is not merely about sending cell-towers into orbit. Layered with mobile communication + global digital currency, it becomes a planetary central bank.

Small thieves are punished; empire-builders are rewarded.

3. The New-Energy Future: Making the Pie Larger

Creating new wealth is harder than redistributing existing wealth. In global economics, the 80-20 rule persists—but renewable energy is the only path that expands the total wealth pool.

Imagine this:
A currently underdeveloped African economy where a person works 40 hours a week, owns a car, owns a home, and never experiences hunger.
Is that achievable?
Yes—absolutely.

Wealth at its core is energy.

With sufficient energy, we can produce nearly infinite food supply. Using current technology, we can generate artificial starch from CO₂ and sunlight. If energy is abundant, food scarcity disappears.

Germany’s rapid de-industrialization after losing cheap Russian energy proves the point: energy determines industrial power.

The new-energy direction seeks cheaper and cheaper energy—expanding global wealth. Current consensus points to photovoltaic power following a Moore-like cost-reduction, and hydrogen acting as a transmission medium.

Analysts who base their bullishness on rising electricity prices are misguided—future energy costs will decline, not rise.

In the long-term horizon, a new paradigm emerges: electricity-backed currency.

Historically, trade currencies evolved from gold and silver → to dollar-gold standard → to petrodollar.
A future model could be electrodollar vs. electric-RMB, benchmarked against consistent electricity price equivalence.

But such pricing requires stable, surplus, tradable electricity.

This demands two conditions:

1. A vast, resilient national grid
2. Massive renewable generation capacity

Which companies align with this vision?

• Downstream EV manufacturing: BYD
• Midstream storage: CATL
• Upstream solar generation: LONGi Green Energy

Interestingly, these stocks have underperformed AI throughout the bull cycle.

4. Capital Determines the Present — Expansion Determines the Future

The issue with AI is not feasibility—it’s capital momentum. U.S. equities are committed to producing visible AI returns—even if through artificial self-reflexive narrative inflation.

In The Great Recession, there’s an anecdote describing 1980s Japanese real estate:

“The Bank of Japan warned lenders about risks, but banks countered that land prices had not fallen for 40 years. Regulators themselves lacked strong counterarguments. The belief in endless price growth became self-fulfilling—until it wasn’t.”

Is market faith in U.S. equities misguided?
Not necessarily.
Betting against U.S. equities today is like laying under a steamroller to pick up pennies.

But the real systemic vulnerability lies in the U.S. dollar. Looking at U.S. manufacturing, fiscal deficits, monetary overreach—believing the dollar will remain dominant forever requires ignoring historical cycles.

Remember this episode:
In the 1960s, 0.68 rubles could purchase 1 U.S. dollar.
By 1994, it took 3,235 rubles to do so.

India owed over $10B in ruble-denominated debt to the USSR. After Soviet collapse, India paid it off using only $1M in USD.

Will the dollar someday experience a similar collapse?
If you think the answer is definitely no—you’re underestimating history.

As long as U.S. markets embrace AI, A-shares will mirror that direction. Capital will cluster accordingly.

Yet dimming one pathway does not brighten another. If AI stumbles, capital doesn’t automatically flow to energy. But from an industrial and civilizational perspective, new-energy expansion is the only route that expands total wealth—not merely reshuffles it.

Today, BYD stands in a position of offensive-defensive balance. As a global EV leader with a market cap under 1 trillion RMB, the potential is still enormous.

If you believe this is a bull market—BYD may simply be early.
If you believe this is a bear market—it may still deliver positive returns.

Ultimately the choice depends on risk preference.
Let us each move forward—perhaps we will meet at the summit.