Analysis of the Potential Impact and Valuation Boost Effect of BYD's Battery Business Expansion to International Automakers

According to the Wall Street Journal and multiple authoritative media reports, U.S. automotive giant Ford Motor is discussing battery cooperation plans with BYD (002594.SZ/01211.HK), China’s leading electric vehicle manufacturer, exploring the possibility of procuring BYD batteries for some of Ford’s hybrid models, and potentially importing the batteries for use in Ford’s vehicle assembly plants outside the U.S.[1][2][3] This marks that BYD’s battery business is expected to enter the supply chain system of top international automakers, which has milestone strategic significance.

Ford Motor recently announced an adjustment to its electrification strategy, deciding to write down approximately $19.5 billion in expenses to scale back its pure electric vehicle segment and expand its hybrid vehicle lineup[1]. Ford’s hybrid vehicle sales reached 55,000 units in Q4 2025, a year-on-year increase of 18%, showing strong market demand. Ford CEO Jim Farley clearly stated at the Detroit Auto Show that, building on the success of the F-150 hybrid model, the company will further expand the application of hybrid and extended-range electric vehicles, and plans to make hybrid, extended-range electric and pure electric models account for approximately 50% of global sales by 2030[2].

As the world’s largest new energy vehicle manufacturer, BYD has profound technological accumulation and cost advantages in the power battery sector. Data from Bernstein Research shows that BYD’s battery shipments reached 286 GWh in 2024, a year-on-year increase of 47%[1]. The company established a battery supply partnership with Changan Ford as early as 2020, and has the experience and capability to support international automakers.

If BYD successfully enters Ford’s supply chain, it will receive technical endorsement from a top international automaker, significantly enhancing its global brand recognition. This has great strategic value for BYD, which has been seeking international breakthroughs. International automakers have extremely strict requirements for suppliers’ quality control and technical standards, and BYD can verify the international competitiveness of its battery technology through this cooperation.

According to financial analysis data, BYD’s current P/E ratio is 22.87x, which is lower than its expected 5-year compound annual revenue growth rate of 49.3%[0]. The increase in the proportion of battery business revenue will enhance the diversification of the company’s revenue structure and reduce the risk of relying on a single vehicle business. If the cooperation is reached, it is expected to bring a stable OEM revenue stream to the company, improving the overall profit quality and cash flow predictability.

BYD’s main battery production capacity is currently concentrated in China, but with the expansion of overseas markets such as Southeast Asia, Europe and Brazil, the company is actively laying out overseas production capacity[1][2]. Cooperation with Ford will further promote the construction of overseas production capacity, enhancing the control and bargaining power over the global supply chain.

It is worth noting that this potential cooperation has attracted attention and backlash from U.S. politicians. White House Trade Advisor Peter Navarro questioned on social media that Ford is “supporting the supply chain of a Chinese competitor”[1]. Mike Gallagher, Chairman of the U.S. House Select Committee on China, also stated that Ford “should cooperate with allies rather than opponents”[3]. This indicates that in promoting its internationalization process, BYD needs to carefully assess geopolitical risks and policy uncertainties.

Based on calculations from a professional valuation model, BYD’s intrinsic value under different scenarios is as follows[0]:

The current WACC is 7.3% and the Beta coefficient is only 0.42, indicating that the market’s risk pricing for BYD is relatively conservative.

Based on the event-driven analysis framework, if the BYD-Ford battery cooperation is successfully reached, it is expected to have the following boost effects on the company’s valuation:

The main driving factors for the valuation boost include:

• Upward Revision of Revenue Growth Expectations
  : Orders from international automakers will raise future revenue growth expectations
• Decline in Risk Premium
  : International cooperation reduces the perception of company-specific risks
• Expansion of Valuation Multiples
  : Entering the international supply chain system can enhance the market’s valuation recognition of BYD

1. Great Strategic Significance
   : Entering Ford’s supply chain is an important breakthrough for BYD’s battery business internationalization
2. Verification of Technical Strength
   : Gaining recognition from a top international automaker demonstrates battery technology competitiveness
3. Optimization of Revenue Structure
   : OEM business revenue will enhance profit quality and diversification
4. Boost in Market Sentiment
   : News of the cooperation is expected to drive valuation repair

1. Cooperation Uncertainty
   : Negotiations are still ongoing, and there is a risk that the agreement cannot be reached
2. Geopolitical Risks
   : Attention from U.S. politicians may affect the progress of the cooperation
3. Execution Risks
   : Overseas production capacity construction and supply chain integration face challenges
4. Intensified Competition
   : The battery industry is highly competitive, and profit margins may be under pressure

The battery cooperation negotiations between BYD and Ford mark an important step for China’s power battery industry towards internationalization. From a valuation perspective, if the cooperation can be successfully implemented, it is expected to bring a 10%-40% market capitalization boost to the company. The company’s current P/E ratio is 22.87x, and compared to the 49.3% revenue growth expectation, there is still room for upward valuation repair. It is recommended that investors closely follow the progress of the cooperation negotiations, while carefully assessing geopolitical risks and execution risks.

BYD’s battery business expansion to international automakers (Ford) has far-reaching strategic significance and valuation boost effects. In the short term, the news of the cooperation itself can have a positive impact on market sentiment and valuation; in the medium to long term, entering the supply chain of a top international automaker will significantly enhance BYD’s brand recognition, technology recognition, and revenue diversification. Considering the intrinsic value shown by the DCF valuation model (intrinsic value of approximately $2,916 in the base scenario) and the valuation boost effect brought by the potential cooperation, we maintain a positive attention attitude towards BYD, and recommend that investors track this event as an important investment catalyst.

[1] Guancha.cn - “Ford Motor Said to Procure BYD Batteries for Hybrid Models” (https://www.guancha.cn/qiche/2026_01_16_803990.shtml)

[2] Yahoo Finance Hong Kong - “Electric Vehicles Are No Longer Popular? Ford Shifts to Hybrid, Said to Discuss Batteries with BYD” (https://hk.finance.yahoo.com/news/電動車不香了-福特轉向油電混合-傳找比亞迪談電池-183003636.html)

[3] Lianhe Zaobao - “Ford’s Plan to Use BYD Batteries for Overseas Hybrid Vehicles Sparks Backlash in the U.S.” (https://www.zaobao.com.sg/realtime/china/story20260117-8116223)

[0] Jinling AI Financial Database - BYD Company Profile, Stock Price Data, Financial Analysis and DCF Valuation