BYD's battery share fell while the market grew 20%. Its own factory was the bottleneck

The global EV battery market grew 20.4 per cent in the first seven months of 2026. BYD's battery installations grew 4.7 per cent. That gap is the whole story of the company's year, and the reason for it sits inside BYD's own factories.

SNE Research's latest count, published on Monday, puts global EV battery usage at 725.2 GWh for January to July, with July alone at 116.0 GWh, up 22.1 per cent year on year. CATL took 289.6 GWh of that — a 39.9 per cent share, up from 38.0 per cent a year earlier and edging toward the psychologically awkward 40 per cent line. BYD came second with 106.7 GWh, but its share fell from 16.9 per cent to 14.7 per cent.

BYD is unusual among the top battery makers in that its principal customer is itself. Its installation figures therefore track its own car sales, and its own car sales have been constrained by its own battery line.

In BYD's interim report on 28 August, chairman and president Wang Chuanfu attributed a 15.72 per cent drop in first-half NEV sales, to roughly 1.8085 million units, to insufficient production capacity of the second-generation Blade Battery, which is still ramping.

"This year's sales depend on battery production," Wang said.

That is an unusually direct thing for a chairman to concede, and the financials carry the same shape. First-half revenue fell 7.13 per cent to about 344.815 billion yuan, and net profit attributable to shareholders dropped 20.54 per cent to roughly 12.32 billion yuan — a decline BYD attributed largely to foreign-exchange losses. The second quarter looked healthier: net profit up 30 per cent year on year, gross margin at a one-year high of 18.9 per cent. Management told analysts the Blade shortage should be fully resolved in the first quarter of 2027.

While BYD idled, other Chinese cell makers took the room. Eve Energy grew installations 53.1 per cent, Gotion High-tech 44.2 per cent, Svolt 39.1 per cent and CALB 34.3 per cent. Rept Battero more than doubled, up 118.5 per cent to 16.9 GWh, entering the global top ten for the first time and pushing out Sunwoda. Seven Chinese firms now sit in that top ten, holding 72.8 per cent of the global market between them — up 3.1 percentage points in a year.

The non-Chinese incumbents had a harder time. LG Energy Solution held third place with 60.3 GWh but grew only 4.5 per cent, well behind the market, with its share sliding from 9.6 to 8.3 per cent despite supplying Tesla, Hyundai Motor Group, GM and Volkswagen. Panasonic grew 7.6 per cent on the back of Tesla's North American sales and still lost share. SK On was the only top-ten maker to shrink outright, down 9.8 per cent to 22.3 GWh.

Regional growth was violently uneven. Installations rose 29.3 per cent in Europe, 16.6 per cent in China, 77.1 per cent across Asian markets outside China and 192.6 per cent in South America. North America fell 20.2 per cent. SNE Research tied that to the expiry of US federal EV tax credits at the end of last September, after which battery-electric vehicles slipped to around 6 per cent of new-vehicle sales.

Which is inconvenient for exactly the companies that built capacity there.

The vehicle side of BYD tells the mirror-image story. Overseas sales in the first eight months hit 1,162,260 units, up 85.72 per cent, while domestic sales fell 32.72 per cent to 1,505,755 — leaving group volume down 6.84 per cent at 2,668,015. August produced a fifth consecutive export record at 189,466 vehicles, up 134.45 per cent and 43.03 per cent of the month's total.

Management has now raised 2026 overseas guidance to 1.9 to 2.0 million vehicles, having started the year targeting 1.3 million and revised to 1.5 million in March. For 2027, Deutsche Bank analysts led by Wang Bin reported a target of more than 2.5 million overseas sales, disclosed on a post-earnings call. Management said shipping capacity had been the binding constraint this year and that volumes would have been higher with more of it. The fixes are a bigger dedicated vehicle-carrier fleet and more local assembly: Indonesia is producing, Brazil is ramping toward 300,000 units a year, and Hungary is expected to start assembly in November or December.

The strategy costs working capital. Inventory turnover stretched to 109 days in the first half from 79 a year earlier, which is what happens when a meaningful slice of your product spends weeks on the ocean. Against that, BYD reported roughly 20,000 yuan of profit per vehicle sold overseas in the first half despite currency headwinds.

Two numbers decide whether BYD's battery share stabilises. The first is the Blade ramp: if the second-generation shortage clears in early 2027 as management expects, installations should track vehicle volume again rather than lag it. The second is the flash-charging backlog, which management put at around 250,000 orders, supported by a target of 20,000 charging stations in China by the end of 2026 and 90,000 by 2028.

CATL, meanwhile, has no such bottleneck and no such dependency. It grew 26.6 per cent while its nearest rival grew 4.7, and it did so selling to everyone. Second place in this market is turning out to be a very different business from first.