BYD's 2nd-Gen Blade Battery Outstrips Supply; 1-2 Month Wait for Vehicle Delivery

Overview

Deutsche Bank released a company update on BYD, maintaining its 'Buy' rating and HKD 127.50 target price. The report focuses on real-world market feedback regarding the second-generation Blade Battery and flash charging technology launched in March: this technology has been fully integrated into high-priced models across Denza, Fangchengbao, Yangwang, and the core BYD brand, significantly driving May sales growth but also causing temporary supply shortages that have extended delivery cycles for popular models to 1-2 months. The firm believes that as capacity is gradually released in Q3, supply bottlenecks are expected to ease, driving accelerated sales and earnings growth in H2.

Core views

Technological Upgrades Translate to Terminal Demand: Since launching the second-generation Blade Battery and flash charging technology on March 5, BYD has applied these innovations across all models in its three premium brands. May sales data shows Denza brand sales grew 3% YoY and 45% MoM to 16,303 units; Fangchengbao surged 140% YoY and 4% MoM to 30,186 units; and Yangwang rose 106% YoY and 8% MoM to 286 units. Dealer surveys indicate that due to tight supplies of the new battery, the wait time for the Denza Z9 GT has reached 4-5 weeks. Supply Shortages Spread to High-Priced Core Brand Models: The second-generation Blade Battery and flash charging technology have expanded to multiple high-priced models under the BYD brand, including Da Tang, Tang L, Song Ultra, Da Han, Han L, Han, Seal 08/07/06 GT, and Sea Lion 08/06/05. Dealers report that these models currently require a universal 1-2 month wait for delivery, and due to severe order backlogs, there are absolutely no terminal price discounts. The company stated it plans to add approximately 30,000 units of second-generation Blade Battery capacity per month for complete vehicle matching, expecting to fully resolve supply shortages by the end of Q3. Technical Performance Constitutes Core Competitiveness: The core breakthrough of the second-generation Blade Battery lies in charging speeds approaching the refueling experience of ICE vehicles. At normal temperatures, charging from 10%-70% takes only 5 minutes, and reaching 97% takes 9 minutes total; even in extreme cold at -30°C, charging from 20%-97% requires only 12 minutes. Additionally, the new battery maintains longer lifespan under frequent fast-charging conditions, and the company has increased battery warranty terms by 2.5%, further enhancing product competitiveness and consumer confidence. Upward Revisions to Earnings and Sales Forecasts: Based on expectations of improved battery supply, the report assumes BYD's monthly sales will increase by approximately 30,000 units sequentially. Accordingly, total Q2 2026 sales are estimated to grow ~60% QoQ to 1.1 million units, corresponding to quarterly net profit of approximately RMB 10 million, up 59% YoY and 147% QoQ. Full-year sales forecast stands at 4.9 million units, up 6% YoY; with Q3 projected at 1.41 million units and Q4 at 1.68 million units.

Analysis framework

The report employs an analytical chain of 'Technology Iteration → Channel Verification → Supply-Demand Deduction → Financial Quantification.' First, it confirms technical specifications of the second-generation Blade Battery and their substantive improvements to user experience from the product side; second, it obtains first-hand terminal data through dealer field research (wait times, discount levels, order backlogs) to verify whether technological upgrades truly translate into effective demand; then, combining the company's disclosed capacity ramp-up pace, it calculates the duration and resolution timing of supply gaps; finally, it maps supply-demand matching results onto monthly/quarterly sales and profit models to form quantifiable financial forecasts. This 'bottom-up' channel verification approach aligns conclusions more closely with actual market rhythms rather than relying solely on company guidance or macro trend extrapolation.

Methodology notes

• Industry Analysis FrameworkValue Chain Transmission

  Verifying transmission efficiency of upstream technological changes to terminal demand via dealer channel research

  Rather than relying solely on company announcements or aggregate industry data, the report gathers micro-indicators such as delivery cycles, terminal discounts, and order backlogs through on-site dealer visits to assess whether new technology is genuinely accepted by consumers and converted into effective purchasing power. This method captures supply-demand mismatch signals earlier and offers greater foresight than merely observing wholesale volumes.

• Industry Analysis FrameworkSupply-demand framework

  Using capacity ramp-up pace as the core constraint variable for near-term sales ceiling

  When products are in short supply, actual sales are determined by supply capability rather than demand willingness. The report uses the company's disclosed 'monthly addition of 30,000 units of battery capacity' as a key input variable directly for constructing sales forecast models for coming months, reflecting the analytical logic that 'supply equals demand' during shortage phases.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• BYD (1211.HK / 002594.SS)

  Direct beneficiary of 2nd-gen Blade Battery tech upgrade; supply shortage reflects strong demand; volume and profit set to rise post capacity release

  Strengths

  Industry-leading charging speed (10%-70% in 5 mins at ambient temp), established premium brand matrix, enhanced terminal pricing power, vertical integration ensures controllable capacity ramp-up

  Weaknesses

  Near-term battery supply constrains sales release pace; execution uncertainty in new capacity ramp-up

  Risks

  Capacity ramp-up below expectations; competitors launching similar fast-charging tech weakening differentiation advantage

Key data

• Denza Brand May Sales16,303 Units+3% YoY, +45% MoM
• Fangchengbao Brand May Sales30,186 Units+140% YoY, +4% MoM
• Yangwang Brand May Sales286 Units+106% YoY, +8% MoM
• Delivery Wait for 2nd-Gen Blade Battery Models1-2 MonthsDealer survey data; no terminal discounts
• Planned New Battery Capacity~30k Units/MonthSequential monthly increase; shortage relief expected by end-Q3
• FY2026 Sales Forecast4.9 Million Units+6% YoY
• Q2 2026 Net Profit Forecast~RMB 10 Million+59% YoY, +147% QoQ
• Target Price127.50 HKDImplies 42.1% upside from June 5, 2026 closing price of HKD 89.70

Impact & implications

The report argues that the technological advantages of the second-generation Blade Battery are effectively translating into market share and pricing power: sustained sales growth in premium brands, combined with supply shortages and firm terminal pricing without discounts for high-priced core brand models, indicates substantial progress in BYD's product strength and brand premium. While near-term supply bottlenecks limit the pace of sales release, they also prevent price wars from eroding margins; once Q3 capacity comes online, pent-up demand is expected to materialize collectively, accelerating H2 performance. This round of technology-driven supply-demand tightness is viewed as a critical validation window for BYD's profitability improvement and product mix upgrade.

Risks

• Slower-than-expected capacity ramp-up for 2nd-gen Blade Battery prolonging supply shortages
• Terminal demand attrition or diversion to competitors during waiting periods
• Raw material price volatility impacting battery cost control
• Macroeconomic shifts or changes in consumer sentiment dampening purchase intent for premium models

What to watch

• Actual monthly capacity additions and installation volumes for 2nd-gen Blade Battery
• Trends in dealer delivery wait times
• Whether Q3 monthly wholesale volumes increase sequentially by ~30k units as expected
• Sales sustainability in subsequent months for premium brands (Denza/Fangchengbao/Yangwang)
• Whether terminal discount policies loosen after supply alleviation