Is BYD Stock a Millionaire Maker?

BYD (OTC: BYDDY), China's largest automaker, has minted a lot of millionaires since its public debut in 2002. A $10,000 investment in its Hong Kong IPO would be worth $1.07 million today.

That rally was driven by its evolution from a battery maker into an automaker, and its expansion into the electric vehicle (EV) market. Warren Buffett's Berkshire Hathaway, which invested in BYD in 2008, also reaped some big profits from the automaker before closing out its position earlier this year.

Image source: BYD.

But with a market cap of $122 billion, BYD is still less valuable than Tesla ($1.43 trillion), Toyota ($270 billion), and other multinational automakers. Could it soar even higher and churn a fresh $10,000 investment into $1 million over the long term?

How did BYD become China's top automaker?

BYD was originally a battery manufacturer. It expanded into the automaking market in 2003, and it launched its first gas-powered vehicles in 2005. It introduced its first battery-powered EDV, the BYD e6, in 2009 -- but it still mainly sold gas-powered vehicles over the following decade.

BYD's auto sales stalled from 2009 to 2020. Its annual shipments still hovered around half a million vehicles, but it struggled to gain new customers as it grappled with tougher competition, quality control issues, and the market shift toward EVs and other new energy vehicles (NEVs).

To break out of that rut, BYD expanded its NEV business with new battery-powered electric vehicles (BEVs) powered by its own lithium iron phosphate (LFP) "Blade" batteries. These batteries gave it an edge against other EV makers because they were generally safer, cheaper, and more power-efficient than traditional lithium-ion batteries.

BYD also revamped its vehicle designs, increased its production capacity, slashed its prices, and expanded beyond China into Southeast Asia, Latin America, and Europe. It vertically integrated its own supply chain to reduce its production costs, unified its fragmented production lines under its e-Platform 3.0 architecture, and sold a higher mix of higher-margin plug-in hybrid vehicles (PHEVs) to stabilize its gross margins. It also became the first major automaker to completely stop selling gas-powered vehicles in 2022.

Those bold, forward-thinking initiatives paid off. From 2020 to 2024, BYD's annual vehicle sales skyrocketed 10 times from 427,302 to 4,272,145 units, its revenue jumped more than fivefold, and its net income increased nearly tenfold. It also nearly matched Tesla's BEV shipments in 2024. JPMorgan expects BYD's annual vehicle sales to rise another 29% to 5.5 million units in 2025 and 18% to 6.5 million units in 2026.

Could BYD generate more millionaire-making gains?

From 2024 to 2027, analysts expect BYD's revenue to grow at a CAGR of 13% as it sells even more PHEVs and BEVs. They also expect its net income to rise at a CAGR of 15% as its economies of scale dilute its operating costs, it produces more cost-efficient first-party components, and it sells more premium vehicles like the Han, Tang, Denza, and Yangwang. By shifting toward that higher-end market, it might gain more pricing power against its low-to-mid range Chinese rivals.

That's a robust growth trajectory for a stock that trades at just 17 times next year's earnings, but it probably won't replicate its millionaire-making gains from the past two decades. Even if BYD grows its estimated earnings per share (EPS) at a CAGR of 15% from 2025 to 2045 -- and trades at a more generous 20 times forward earnings by the final year -- its stock would rise about 13 times from its current price and boost its market cap to $1.6 trillion. That's a great multibagger gain, but it only churns a fresh $10,000 investment into about $130,000. So instead of wondering if BYD will mint more millionaires, investors should realize it's a solid growth stock that is trading at surprisingly low valuations. Even though Buffett no longer owns the stock, it could soar a lot higher as more investors pivot back toward the Chinese market.

JPMorgan Chase is an advertising partner of Motley Fool Money. Leo Sun has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, and Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.