Is BYD the Most Undervalued EV Stock in 2025? A Deep Dive into the Chinese EV Giant's Potential

The electric vehicle (EV) market has been a rollercoaster for investors, with valuations swinging wildly based on hype, innovation, and macroeconomic factors. While Tesla remains the poster child of the EV revolution, another player—China’s BYD (Build Your Dreams)—is quietly outpacing competitors and delivering staggering results. Yet, despite its dominance, BYD’s stock (OTCMKTS: BYDDY) appears to be significantly undervalued compared to its peers. In this blog post, we’ll explore why BYD might be the most compelling EV play in the stock market today, backed by recent performance, innovative technology, and a valuation that screams opportunity.

BYD’s Meteoric Rise: The Numbers Speak for Themselves

In 2024, BYD achieved a monumental milestone, reporting annual revenue of $107 billion (777 billion yuan), surpassing Tesla’s $97.7 billion. This 29% year-over-year revenue growth was driven by a record 4.27 million vehicle deliveries, including 1.76 million battery electric vehicles (BEVs) and 2.49 million plug-in hybrids (PHEVs). By comparison, Tesla delivered 1.79 million BEVs, with a 1.1% decline in annual deliveries—the first such drop in years.

BYD’s fourth-quarter 2024 performance was equally impressive, with net profit soaring 73.1% to 15 billion yuan ($2.1 billion) and revenue climbing 52.7% to 274.9 billion yuan. The company’s dominance in China, the world’s largest auto market, is undeniable, commanding a 32% share of new energy vehicle (NEV) sales compared to Tesla’s 6.1%.

But it’s not just about domestic success. BYD’s global footprint is expanding rapidly, with overseas shipments jumping 71.9% in 2024, accounting for 10% of its sales. With new factories planned in Hungary, Turkey, and potentially Germany, BYD is positioning itself as a serious contender in Europe, where Tesla’s sales slumped 40% in February 2025.

Why BYD Is Undervalued: A Valuation Snapshot

Despite its stellar performance, BYD’s stock trades at a fraction of the multiples commanded by Tesla and other EV peers. Let’s break it down:

• Price-to-Earnings (P/E) Ratio: BYD’s forward P/E is approximately 15-20, depending on analyst estimates, compared to Tesla’s forward P/E of over 50. This suggests BYD is priced at a significant discount relative to its earnings potential.

• Price-to-Sales (P/S) Ratio: BYD’s forward P/S ratio is around 0.72x, indicating strong top-line value. Tesla’s P/S ratio, by contrast, hovers above 5x, reflecting a premium valuation despite slower growth.

• Price-to-Earnings-Growth (PEG) Ratio: At 0.22x, BYD’s PEG ratio signals that its earnings growth is undervalued, making it a compelling pick for growth-oriented investors.

• Analyst Sentiment: Analysts, including Morgan Stanley, have upgraded BYD to “overweight” and raised price targets by up to 43%, citing its quality, innovation, and global market share gains. Some estimates suggest BYD’s stock is undervalued by nearly 35%.

These metrics paint a clear picture: BYD is growing faster than Tesla, yet its stock is priced as if it’s a laggard. This disconnect between fundamentals and valuation is what makes BYD a potential steal.

Innovation and Competitive Edge: BYD’s Secret Sauce

BYD’s undervaluation isn’t just about numbers—it’s about its technological and strategic advantages that the market seems to overlook:

1. Battery Technology Leadership: BYD started as a battery maker, giving it a unique edge in the EV supply chain. Its Blade Battery, introduced in 2020, offers superior safety, range, and longevity. In 2025, BYD unveiled its “Super e-Platform” battery and charging system, capable of adding 250 miles of range in just five minutes—outpacing Tesla’s Superchargers, which take 15 minutes for 200 miles.

2. Affordability and Market Reach: Unlike Tesla’s premium positioning, BYD targets the mass market with entry-level models starting at just $10,000 in China, compared to Tesla’s Model 3 at over $32,000. Models like the Qin sedan and Song SUV dominate sales due to their affordability and hybrid options, broadening BYD’s appeal.

3. Vertical Integration: BYD’s control over its supply chain, from batteries to semiconductors, allows it to keep costs low and margins high. Its return on equity (ROE) of 24.02% exceeds its five-year average, showcasing operational efficiency.

4. Advanced Driver Assistance: In 2025, BYD launched “God’s Eye,” a driver-assistance system rivaling Tesla’s Full Self-Driving, offered at no extra cost on most models. This move enhances BYD’s value proposition and competitiveness.

5. Hybrid Dominance: While Tesla focuses solely on BEVs, BYD’s plug-in hybrids accounted for 2.49 million units in 2024, tapping into markets where charging infrastructure lags. This flexibility gives BYD an edge in transitioning markets.

Risks to Consider

No investment is without risks, and BYD faces several challenges:

• Geopolitical Tensions: Tariffs, such as the EU’s up to 38.1% on Chinese EVs and U.S. 100% tariffs, limit BYD’s access to key markets. However, BYD is countering this with local manufacturing in Europe and other regions.

• Competition: China’s EV market is fiercely competitive, with players like Li Auto, NIO, and Xiaomi vying for share. BYD’s scale and cost advantages help mitigate this risk.

• Brand Recognition: Outside China, BYD lacks the brand cachet of Tesla, which could slow its global expansion.

• Macroeconomic Headwinds: A slowing Chinese economy or reduced subsidies could impact domestic sales, though government trade-in programs have so far bolstered demand.

Despite these risks, BYD’s diversified revenue streams, global ambitions, and technological prowess position it to navigate challenges better than many peers.

Why Investors Should Pay Attention Now

BYD’s stock has already delivered impressive returns, with a 51% year-to-date gain in Hong Kong in 2024. Yet, at current levels, it remains a bargain. Warren Buffett’s Berkshire Hathaway, which bought a 10% stake in 2008 for $230 million, still holds a 4.4% stake worth $2.4 billion, signaling long-term confidence. Charlie Munger, Buffett’s late partner, famously championed BYD for its focus on affordable EVs and battery innovation.

Posts on X echo this sentiment, with users calling BYD “massively undervalued” compared to Tesla’s “massively overvalued” stock. Analysts expect BYD to surpass Tesla in global BEV sales in 2025, driven by its aggressive expansion and lower price points.

Conclusion: A Golden Opportunity?

BYD’s combination of explosive growth, cutting-edge technology, and a dirt-cheap valuation makes it a standout in the EV sector. While Tesla trades at a premium despite declining deliveries, BYD is delivering record results and innovating at a breakneck pace. For investors seeking exposure to the EV megatrend, BYD offers a rare chance to buy a global leader at a discount.

That said, geopolitical risks and intense competition warrant caution. Investors should weigh these factors and consider BYD as part of a diversified portfolio. If BYD continues its trajectory, it could soon shed its “undervalued” label and become a household name in the global EV market. The question isn’t whether BYD is undervalued—it’s how long the market will take to catch up.

Disclaimer: This blog post is for informational purposes only and not financial advice. Always conduct your own research before investing.