After BYD's Hong Kong stock price has risen 40% since the beginning of the year, JP Morgan issued the "ultimate question": If BYD can truly become the "Toyota" of the global new energy vehicle market and reach a global shipment volume of about 10 million vehicles around 2030, how much long-term upside potential does the company really have? JP Morgan believes that with the production bases in Thailand, Indonesia, and other overseas locations coming online, 2026 will be an important turning point for BYD's globalization strategy. The company's global delivery volume is expected to exceed 6.5 million units, and its market share in the global light vehicle market will expand to 7%. By 2030, the company's total vehicle sales are expected to exceed 10 million units, with overall net profit expected to reach 175.4 billion yuan. Analysts have raised BYD's target price for 2026 to HKD 600 (Hong Kong stock) / RMB 560 (A-share), representing an upside potential of 66% / 54% compared to the current stock price. 2026 Will Be a Turning Point for InternationalizationJP Morgan analyst Lai Yizhe's team stated in a report on February 20 that after communicating with nearly 200 investors, the analysis team believes that investors are increasingly confident in BYD's long-term narrative in both domestic and international markets.Analysts believe that 2026 will be an important turning point for BYD's global strategy. By then, BYD's four overseas production bases or complete vehicle production lines in Thailand, Indonesia, Brazil, and Hungary will be established and gradually increase production. Among them, the Thailand factory will be the first to start production in the first half of 2025. This will lay a solid foundation for BYD to further expand its overseas market and enhance its global competitiveness.Although the European Union will raise tariffs, BYD will focus on competing overseas through configuration or products, rather than price. At the same time, opportunities in the domestic plug-in hybrid sector are continuously increasing, and the same may be true overseas, which means further business opportunities.JP Morgan expects that by 2026, BYD's global delivery volume (including the Chinese market) will reach 6.5 million units, with approximately 1.5 million units delivered to overseas markets. This means that BYD's share in the global light vehicle market (including fuel vehicles) will expand from 3% in 2023 to 7% in 2026, while its share in the new energy vehicle market (excluding hybrid vehicles) will remain around 22%.In the short term, analysts believe that the financial report date on March 24 will be BYD's next catalyst."Non-zero-sum game" Competitive LandscapeJP Morgan believes that in the Chinese automotive market, BYD is not in a "zero-sum game" with other Chinese peers that have launched or are about to launch similar L2+ level intelligent driving functions.On the contrary, foreign mass-market brands that currently do not offer similar features, especially those in the mid-to-low price range, will face greater pressure to lose market share.Analysts point out that as Chinese brands like BYD actively launch competitively priced smart driving products, the Chinese automotive market will exhibit two major structural trends:The penetration rate of L2+ NOA (Navigation Assisted Driving) is rapidly increasing, potentially rising from around 7-8% to 15-20% in the coming years.The market share of Chinese brands is accelerating, potentially reaching about 80% by 2030 or earlier.Analysts believe that BYD is the main automaker capable of driving the popularization and penetration of L2+ functions in China, as BYD has a comprehensive product portfolio, extensive distribution channels, and strong vertical integration capabilities.The ultimate goal of smart driving is to develop vertically integrated solutionsIn terms of smart driving technology, JP Morgan believes that investors can generally categorize Chinese brands into two types:Self-developed solutions, represented by XPeng, which have the capability to develop proprietary algorithm solutions and even the potential to develop self-developed chips.System integration methods, most Chinese brands currently fall into this category, collaborating with key suppliers in the semiconductor chip, sensor, data, and algorithm fields while striving to develop self-developed solutions. BYD currently belongs to this category.JP Morgan states that BYD's partners include NVIDIA, Horizon, Momenta, WeRide, Suda Technology, Hesai, Bosch, and others.JP Morgan believes that in the long run, BYD's goal may be to develop vertically integrated solutions for its smart driving products, including sensors and chips. Considering that BYD is already producing key components such as batteries and IGBTs (Insulated Gate Bipolar Transistors), this goal is feasible.Cost trend of NOA solutions is decliningAlthough equipping smart driving features increases costs, BYD has not raised the manufacturer's suggested retail price for new models.JP Morgan believes this is another form of price marketing, but BYD has the ability to alleviate cost pressures through economies of scale, passing pressure onto suppliers, and improving product mix.JP Morgan expects that the material cost of highway NOA will decrease from RMB 4,000-5,000 in 2024 to about RMB 3,000 by 2025, while the material cost of urban-level NOA will decrease from about RMB 20,000 to RMB 10,000-15,000 during the same period. The decline in costs will drive the popularization of advanced L2+ functions.JP Morgan expects that the price of cars equipped with urban-level NOA will decrease from last year's approximately 200,000 RMB or more to about 150,000-200,000 RMB this year, while the price of cars equipped with highway NOA may also drop from last year's over 150,000 RMB to about 100,000 RMB this year.Upgrading the target value for Hong Kong stocks to 600 HKDJP Morgan has assessed the long-term upside potential of BYD's stock price based on various assumptions.Analysis shows that BYD's long-term stock price could range between 515-685 HKD per share. The bank derived a target price of 600 HKD/560 RMB as of June 2026 based on the median of the long-term target price range. The target price corresponds to 1.7 times/1.5 times the expected price-to-sales ratio for 2025/2026, implying a target market value of approximately 1.744 trillion HKD/223 billion USD, while Toyota's market value is 287 billion USD.In comparison, Xiaomi Group's automotive business is expected to have a price-to-sales ratio exceeding 3-4 times in 2026