Strategic Partnerships and Policy Shifts Propel BYD Forward

The electric vehicle giant BYD received a dual boost this weekend from significant corporate and geopolitical developments. Reports emerged that the company is in advanced negotiations with Ford Motor Company regarding a major battery supply agreement. Concurrently, Canada announced a substantial reduction in punitive tariffs on Chinese EVs, reopening a crucial North American market. BYD’s American Depositary Receipts (ADRs) reacted positively to the Ford news, closing Friday’s session with an intraday gain of 3.6%.

A North American Market Reopens

In a notable policy reversal, the Canadian government announced on Friday a dramatic easing of its trade stance. The previous 100% tariff on Chinese electric vehicles has been slashed to 6.1%. This change is part of a broader trade agreement, which also covers Canadian canola exports, and establishes an annual import quota of 49,000 vehicles from China.

For BYD, this represents a clear strategic victory. The massive tariff hikes imposed in 2024 had effectively blocked market access. Under the new framework, models such as the Seagull and Dolphin are expected to regain entry to the Canadian market starting in March 2026, albeit within the defined volume limits.

Key elements of the Canadian policy shift:
* Tariffs on Chinese EVs reduced from 100% to 6.1%.
* An annual import quota of 49,000 vehicles is established.
* The Canadian market reopens after being closed since 2024.
* BYD anticipates exporting the Seagull and Dolphin models from March 2026.

Ford Seeks Battery Technology Partnership

Separately, financial news outlets Bloomberg and The Wall Street Journal reported that Ford is holding advanced talks with BYD to source batteries for a new generation of plug-in hybrid vehicles. The supply would be directed to Ford manufacturing plants located outside the United States, which produce vehicles for global markets.

The potential deal centers on BYD’s lithium iron phosphate (LFP) battery technology, recognized as a cost-effective solution for hybrid applications. For Ford, this partnership would support its electrification strategy by providing a competitively priced component.

The discussions have not gone unnoticed in political circles. In Washington D.C., White House advisor Peter Navarro and Representative John Moolenaar voiced criticism on Friday afternoon regarding increased reliance on Chinese technology. Ford countered by emphasizing that the proposed supply chain primarily involves non-U.S. production facilities.

Highlights of the potential Ford-BYD agreement:
* Negotiations focus on a battery supply contract for new plug-in hybrid lines.
* BYD would supply Ford factories located outside the U.S.
* Ford aims to utilize BYD’s LFP technology to manage costs.
* The plan has drawn political criticism in the U.S. despite its non-U.S. focus.

Should investors sell immediately? Or is it worth buying BYD?

Valuation Gap Persists Despite Market Leadership

These developments occur as BYD continues to solidify its position as the global volume leader in electric vehicle sales. The company reported approximately 2.26 million all-electric vehicle deliveries for the full year 2025, surpassing Tesla’s 1.64 million deliveries during the same period.

Despite this higher sales volume and a profitable international expansion, a significant valuation gap remains between the two automakers in the equity markets:
* Tesla’s market capitalization in mid-January 2026: approximately $1.45–1.47 trillion.
* BYD’s market capitalization: approximately $110–121 billion.

The Ford negotiations underscore a growing trend where established Western automakers view BYD not only as a competitor but also as a vital supplier of core technology. This opens a secondary revenue stream for BYD beyond vehicle sales, through components and technology licensing.

Ford’s existing strategy includes a $3.5 billion battery plant in Michigan, built using licensed technology from CATL, another major Chinese battery supplier. Adding BYD as a supplier for overseas plants would further integrate Chinese battery tech into Ford’s global supply chain, navigating ongoing geopolitical tensions.

Focus Turns to Execution

Attention now shifts to whether the talks with Ford will culminate in a formal supply contract and how swiftly BYD can operationalize the new Canadian export quota of 49,000 vehicles.

Market analysts note that the U.S. market remains largely inaccessible due to high tariffs. However, BYD is developing an indirect pathway via:
* Vehicle exports to Canada, targeting the lower-price segment (under $30,000).
* Technology and component supply agreements with established manufacturers like Ford.

The 3.6% rise in BYD’s ADRs following the Ford report indicates investor confidence in the high-margin potential of the licensing and supply business, especially in politically challenging markets.

With the Canadian tariff reduction now effective, specific export plans from BYD are anticipated in the near term. A key determinant of success will be the company’s speed in aligning production and logistics capacity with the Canadian quota and its targeted affordable EV sector.