Analysis of Long-Term Market Share and Valuation Impact of BYD's Lagging R&D Investment Efficiency

This analysis is based on a comparative study of R&D investment and market performance among three Chinese new energy vehicle enterprises [0][1][2][3][4][5][6]. Key findings are as follows:

1. Model and Sales Comparison
   : Analysis of same-class models from BYD and Geely (Seagull vs Star Wish, Tang L vs Galaxy M9) shows that Geely models have advantages in configuration and cost-performance. In November 2025, Geely Star Wish sales reached 42,038 units, and Galaxy M9 sales hit a new high of 10,639 units [1], while BYD’s corresponding models did not enter the top ranks of China’s EV sales in the same period, with a clear sales gap.

2. R&D Investment and Efficiency
   : BYD’s 2024 R&D investment reached RMB 54.16 billion (approximately USD 7.5 billion), the highest among Chinese A-share companies [2]. However, its Q3 2025 net profit fell by 32.6% year-on-year, and it lowered its 2025 sales target from 5.5 million units to 4.6 million units [0][3], in sharp contrast to Geely’s 34% sales growth in November 2025 [1], indirectly reflecting BYD’s insufficient R&D efficiency. Xiaomi’s R&D investment in EV and autonomous driving exceeded USD 1.4 billion [4], far lower than BYD’s, but the Xiaomi SU7 delivered 135,000 units within 9 months of launch, and the YU7 SUV even had a waiting list of over a year [4][5], highlighting its R&D efficiency advantage.

3. Valuation and Market Position
   : BYD’s current market capitalization is USD 850.42 billion with a Price-to-Earnings Ratio (P/E) of 67.44 [0], while Geely’s market capitalization is USD 170.62 billion with a P/E ratio of only 10.38 [0]. BYD’s high valuation is mainly based on its early market dominance, but R&D efficiency issues may put pressure on future valuation.

1. R&D Efficiency Rather Than Scale Is the Core of Competition
   : BYD leads in R&D investment scale but has not focused resources on consumer pain points, leading to insufficient product competitiveness. Geely’s cost-performance strategy and Xiaomi’s efficient R&D path are more aligned with market demand, becoming key drivers of their sales growth.

2. Market Share Trend May Change
   : BYD’s 2024 China sales were 4.25 million units, ranking first in the market [3], with Geely following closely at 3.34 million units [6]. However, since 2025, BYD’s sales growth has stagnated, Geely’s sales have continued to grow, and Xiaomi, as a new entrant, has achieved monthly deliveries exceeding 20,000 units for seven consecutive months [5], so BYD faces the risk of market share erosion.

3. Two Sides of Vertical Integration Advantage
   : BYD has a vertically integrated supply chain from batteries to semiconductors [0], which helps reduce costs, but this advantage has not been converted into product competitiveness. If BYD cannot adjust its R&D direction to match consumer demand, the cost advantage brought by vertical integration may be difficult to offset the impact of insufficient R&D efficiency.

• Risks (BYD)
  : Persistent low R&D efficiency may lead to further market share loss; the high P/E ratio (67.44) relies on early market position—if sales and profit growth continue to be weak, valuation may face correction pressure; R&D path deviating from consumer demand may lead to backward product iteration.
• Opportunities (BYD)
  : The vertically integrated supply chain still has cost advantages; overseas market expansion potential is large, which may alleviate domestic market competition pressure [0].
• Opportunities (Competitors)
  : Geely’s cost-performance strategy and Xiaomi’s efficient R&D path have been verified by the market—if they continue to advance, they are expected to further expand market share.

BYD’s R&D investment efficiency lags behind Geely and Xiaomi, which has led to lower sales volume and profit margin for same-class models. In the long run, this may affect market share and valuation. Geely has gained market recognition through its cost-performance strategy, and Xiaomi through its efficient R&D path, becoming BYD’s main competitors. BYD’s vertical integration advantage provides it with some buffer, but its future development depends on whether it can adjust its R&D direction to match consumer demand.