Is BYD Stock Your Ticket to Becoming a Millionaire?

Key Points

• BYD isn’t a household name within the United States largely because it doesn’t do business here.

• Nevertheless, this EV powerhouse does do business where electric vehicles are increasingly in demand.

• Whether it’s a millionaire maker or not, BYD is a compelling prospect for most growth investors’ portfolios.

• 10 stocks we like better than BYD Company ›

Are you looking to turn a little money now into a lot of money in the future? Maybe even a seven-figure stash? Stocks are the answer, of course, although it's easier said than done. You need to find the right stocks at the right time and then stick with them long enough to achieve your goal. That can be a tall order.

Enter BYD Company (OTC: BYDDY) -- one of a handful of names a growing number of investors are betting will get them to the seven-figure mark. But are they actually right about this stock's potential upside?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

What's BYD?

Never heard of it? You might be more familiar with it than you think. Remember relatively recent headlines about Tesla (NASDAQ: TSLA) no longer being the world's biggest electric vehicle (EV) company? BYD's the outfit that eclipsed it.

That may be a bit tough to believe given that you've never actually seen a BYD-made EV on American roads. There's a perfectly good explanation: BYD doesn't sell its EVs in the U.S. Its core market remains its home country of China, although it's doing pretty well in the rest of the Pacific region as well as in Europe. All told, the company sold nearly 607,000 battery-powered EVs in the second quarter of this year versus Tesla's deliveries of only 373,728 automobiles.

Image source: Getty Images.

And that's just battery-only EVs. The company sold even more hybrids during this three-month stretch. The company also manufactures buses, high-speed trains, electronics components, and perhaps most notably, lithium batteries ... including for other carmakers' EVs.

That still doesn't tell the whole story. Unlike most other auto manufacturers, BYD is fiercely self-sufficient. It makes its own electronic components for its EVs, for example, and of course, its own EV batteries. It even owns seven of its own cargo ships, each of which is capable of delivering thousands of vehicles to overseas markets, providing the company with enormous flexibility rather than leaving it dependent on third-party maritime shipping services.

Oh, yeah ... BYD is profitable too, and pretty consistently so.

BYD is in the right place, at the right time, with the right product(s)

Still, given what we know of the United States' EV market, it would be easy to conclude millionaire-making gains aren't in the cards anytime soon, if ever. The American Automobile Association (which you know better as AAA or just Triple-A) says the number of Americans who are likely to buy an EV is steadily falling, from 2022's modest figure of 25% to only 16% this year; drivers are mostly worried about the complicated logistics of keeping their batteries charged away from home.

Meanwhile, competition for this shrinking crowd of would-be EV owners is heating up. Although Tesla is still the leader of the U.S. EV market, recent entries into the race from Ford Motor Company, General Motors, and Hyundai (just to name a few) are forcing Tesla to discount its cars -- pinching profit margins as a result -- in order to maintain this market leadership. Moreover, Ford is investing $5 billion as part of an effort to introduce a $30,000 battery-powered pickup truck in the U.S., as well as make improvements to EV batteries that will alleviate some of consumers' top concerns.

In other words, it's an increasingly competitive and difficult market -- not the kind any newcomers' company would want to dive into.

The thing is, this dynamic is unique to America. Everywhere else, demand for EVs is on the rise. That's particularly true in and around China where BYD sells about three-fourths of its passenger vehicles. Data from the China Association of Automobile Manufacturers indicates sales of new energy vehicles (battery-only as well as hybrid-electric) have been breaking records all year long, with July's sales of 1.26 million cars up 27% year over year, mirroring the growth pace seen since 2021. In fact, new energy vehicles account for roughly half of China's sales of new cars, en route to an 80% share by 2030, according to the International Energy Agency.

And BYD isn't just leading this important automobile market; it's dominating it. The company controls on the order of 30% of the country's EV business, according to numbers from the China Passenger Car Association (CPCA), versus next-nearest Geely's share of a little over 10%. The company's clearly positioned to win at least its fair share of whatever growth awaits in its core market.

That's just China's EV business. Again, BYD operates several others, including supplying rival EV companies with the lithium-based batteries required to power them. Let's also not look past the fact that BYD stands ready to enter the U.S. market if and when it makes sense to do so.

Is BYD a millionaire-maker?

But the overarching question remains: Is BYD your ticket to becoming a millionaire? It certainly has the potential to help you become one. Just make sure your expectations are reasonable relative to the company's potential from here. It's unlikely a $10,000 investment today would be worth $1 million a year from now, for instance, or even 10 years from now.

A $100,000 investment in this company today, however, could potentially turn into $1 million in 15 to 20 years' time. That would only require an average annual gain of between 12% to 16%, which is above the market's historical norm but not beyond the realm of plausibility given what BYD does, how well it does it, and the era in which it's doing it.

Of course, as with other high-growth/high-profile international stocks, you'll want to keep your finger on the pulse of any geopolitical rhetoric that could impact its growth or operations.

Should you invest $1,000 in BYD Company right now?

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company and General Motors. The Motley Fool has a disclosure policy.