BYD stock (OTC: BYDDY) hit a bit of a speed bump over the past year, falling from a high of $71 per share 12 months ago to a low of $43 in February.
It's rallied back these past few months, climbing 40%. However, at $60 per share, BYD stock is still 18% shy of its 52-week high and will likely do even better than that in the short and long term.
The reason is that BYD is better positioned than any of its direct competitors, which have suddenly been waylaid by Western tariffs.
You see, the EU introduced new tariffs on Chinese EVs last month, with penalties ranging from 17%–38%. That comes on top of the 10% duty that's already being levied.
Now, BYD's first advantage is that its 17.4% tariff is already on the low end of that range. By comparison, China's state-owned carmaker SAIC is facing a 38.1% tariff, while Geely, the country's fourth-largest EV company, is set to pay 20% more.
So even if it's forced to pay the full tariff, BYD will still be able to undercut other Chinese car companies in Europe.
But that's not all.
BYD has a second built-in advantage through its physical footprint in Europe.
To that point, the company is already currently building a factory in Hungary (where it already has a high-tech e-bus production facility) to build cars specifically for the European market. That plant is expected to be up and running in three years, making it the first major Chinese automaker to build passenger cars in Europe.
And last week, news broke that BYD now aims to supplement that with another $1 billion production facility in Turkey.
That will also help the company circumvent the EU tariffs because Turkey has a customs union with the EU that dates back to 1995. Turkey also has a population of 90 million and its own burgeoning EV market. About 7.5% of car sales sold in Turkey last year were electric.
So there's plenty of room for growth, as that's only half the adoption rate in Europe, where EV sales make up more than 14% of the market. And that figure has nowhere to go but up since the bloc plans to ban sales of gas-powered cars by 2035.
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European car companies will do everything they can to compete with BYD in the EV space, but BYD maintains a huge cost advantage — an advantage that it's clearly prepared to protect.
In fact, the EU tariffs could actually be doing BYD a favor by tripping up other Chinese manufacturers, leaving it to stand alone as Europe's top EV value option.
And while the United States has rolled out its own tariffs on Chinese EVs, BYD is pushing its advantage in other parts of the world.
Last week it opened its first EV plant in Thailand (its first in Southeast Asia), where the government intends to convert 30% of its annual vehicle production to electric by 2030. That factory has an annual production capacity of as many as 150,000 vehicles.
BYD also acquired a former Ford factory in Brazil and is currently scouting locations for a plant in Mexico.
And obviously, it still enjoys generous support back home in China, where nine government agencies — including the Commerce Ministry and the central bank — have vowed continued and intensified support for the domestic EV industry.
Given all that, you've gotta like the prospects for BYD stock as it continues to vie with Tesla for the global EV crown.
Fight on,
Jason Simpkins
Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more...
In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor's page.
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