At the extraordinary shareholders' meeting held on December 5, BYD's chairman, Wang Chuanfu, made two pivotal observations regarding current market trends: "Any new technology can only maintain its lead for eighteen months," and "We might experience a slump in growth for one or two months, or even one or two quarters." Faced with a slowdown in domestic growth and unexpectedly robust overseas performance, Wang Chuanfu refrained from making bold predictions. He acknowledged that competitors are closing in and that industry-leading technologies will continue to emerge in the coming years.

Wang Chuanfu admitted that the past few years had been marked by "favorable battles" (Shunfeng Battle), but now the technological gap between BYD and its rivals is narrowing. As 2026 approaches, the question looms large: With the window of opportunity for new technologies shrinking and first-quarter demand being pre-emptively met, can BYD, which is committed to avoiding price wars, regain its competitive edge?

Can New Technologies Replicate the 18-Month Lead?

Wang Chuanfu stated, "Technological leadership has a limited lifespan, typically no more than eighteen months." This suggests that the advantages gained from introducing any new technology will dissipate within a year and a half.

"We might see a decline in performance growth for one or two months, or even one or two quarters," Wang Chuanfu predicted at the shareholders' meeting, referring to upcoming sales trends.

With less than a month remaining in 2025, BYD has witnessed a slowdown in domestic sales growth, contrasted by a surge in overseas sales. This year, the company has cumulatively sold 4.182 million new vehicles, representing a year-on-year increase of approximately 11.3%. In November alone, BYD sold 480,200 units, a yearly high, with exports surpassing 100,000 units for the first time.

"BYD's brand image overseas is significantly stronger than domestically. This year's overseas growth has been outstanding, exceeding our expectations. The domestic market still requires time, and technological development follows its own cycles," Wang Chuanfu remarked.

The crux of the matter lies in whether the upcoming heavyweight new technologies can drive sales growth for BYD. Wang Chuanfu commented, "Three to five years ago, I frequently discussed strategy, but now I can't. Many competitors are adopting BYD's strategies. Competitors are following too closely; every extra day we keep our innovations secret gives us an 18-month-plus-one-day advantage." He revealed at the shareholders' meeting that in the initial phase of electrification, new energy vehicles still face unresolved issues, such as slow charging and difficulty charging in low temperatures. BYD is striving to overcome these challenges.

Previously, the success of BYD's Blade Battery and DM-i technology stemmed from providing "systematic solutions" that were urgently needed by the market at the time, rather than relying on a single parameter advantage. For instance, the Blade Battery elevated the status of lithium iron phosphate batteries. Its highly integrated design also optimized body structure and space utilization. The DM-i super hybrid precisely met users' needs for a balance between fuel economy, range convenience, and electrification experience, becoming a key factor in BYD's explosive sales growth in a short period. More critically, these technologies had broad applicability and could be rapidly deployed across multiple product lines.

In the new technological cycle, the maturity of the new energy vehicle industry chain has lowered technological barriers compared to the early stages. Competitors can often introduce similar or even superior technologies in a shorter timeframe, particularly in the field of intelligence, where numerous leading players exist.

Consumer attention to technology has shifted from "availability" to "quality" and "suitability." For new technologies to achieve immense success, akin to the Blade Battery and DM-i, they must not only lead but also precisely address the most common and core user pain points in the future.

Is Achieving Over 5 Million in Sales by 2026 Not a Daunting Task?

Based on the sales figures for the first 11 months, BYD is projected to achieve an annual sales volume of 4.65 to 4.7 million units in 2025. Thus, even if BYD's sales growth rate declines to single digits in 2025, as long as it maintains a 6.5%–7.5% increase, it still has a realistic chance of breaking the 5 million annual sales mark in 2026.

From an overall market perspective, in the first 11 months of 2025, two domestic automakers stood out prominently, with BYD and SAIC both surpassing the 4 million sales milestone, with BYD leading SAIC by approximately 74,000 units. Geely is approaching 3 million in annual sales, while Changan and Chery are at the 2.6 million and 2.5 million levels, respectively, with Great Wall stabilizing at the 1.2 million level.

Overseas, Chery leads with 1.2 million units. SAIC and BYD are in the second tier, followed by Changan, Great Wall, and Geely.

From the perspective of new energy penetration, Changan, Geely, and Chery's new energy sectors are experiencing faster growth than their overall sales; Changan's new energy sales increased by 54.66% year-on-year from January to November, and Geely's new energy sales reached a high of 187,800 units in November; BYD continues to maintain its lead in new energy sales by scale.

Based on sales forecasts for the first 11 months, BYD and SAIC are expected to continue holding the top two positions.

Next, the biggest variable for all players will be adjustments to subsidy policies. Given recent market conditions, factors such as the halving of purchase taxes and reduction of local trade-in subsidies next year may pre-emptively exhaust first-quarter consumer demand.

JPMorgan Chase predicted in October this year that adjustments to new energy vehicle subsidy policies could cause Chinese auto sales to decline in 2026, breaking six years of continuous growth, with a worst-case scenario of a 5% decline.

Wang Chuanfu's "18-month technological cycle" will take on a more stringent practical significance in 2026. Although multiple authoritative institutions predict that the penetration rate of the new energy vehicle market will continue to rise, expected to stabilize or even exceed 60% by 2026, high penetration will not lead to unlimited quantitative expansion but rather more intense "stock competition" and "incremental structural differentiation." At this stage, competition will no longer be just against fuel vehicles but a "culling war" within the new energy sector. Every new technology introduced may see its "bonus period" further compressed in an environment without subsidy amplification effects. Rapid competitor imitation, swift cost reductions, and market demands for rapid technology implementation and scale effects will force companies to commercialize and popularize technologies in even shorter timeframes.

Judging by recent moves at the Guangzhou Auto Show, multiple automakers are deploying new technologies in more affordable models. For example, the Han L and Tang L, equipped with the Divine Eye B solution, have unlocked parking spot-to-parking spot assisted driving functions through the latest upgrades. Currently, new vehicles supporting this function are priced at least tens of thousands of yuan higher than the Han L and Tang L.

Even if BYD does not maintain rapid growth for one or two quarters, achieving over 5 million in sales by 2026 may not be an insurmountable challenge. Wang Chuanfu said, "It's not difficult for us to gain a bit more market share through aggressive sales tactics or rhetoric. But we must support anti-involution with actions," implying that the past approach of rapidly seizing market share through low prices will be hard to sustain.