Co.’s profit and sales missed analyst estimates in the latest quarter, undermining the case that exports will shield the world’s largest maker of electric vehicles from a prolonged downturn back home in China.

Third-quarter net income climbed 28% from a year earlier to 10 billion yuan ($1.5 billion), the Shenzhen-based Chinese carmaker said in a statement on Thursday. That was 17% below the average analyst estimate compiled by Bloomberg. Revenue was about 8% less than what analysts had estimated.

Though overseas sales helped push earnings to rise for a second straight quarter, the company faces increasing challenges. The popularity of BYD and other Chinese brands has been growing so fast overseas that some authorities have recently stepped up efforts to slow down the flood of imports from China.

“Exports face new headwinds just as they have become a key profit driver for BYD,” said Joanna Chen, an analyst at Bloomberg Intelligence. Investors will focus on how fast BYD can ramp up overseas production, and how profitably it can make cars overseas compared with back in China, she said.

Meanwhile, sluggish sales and brutal competition in China persists. It’s largely why BYD shares have fallen 28% this year in Hong Kong, headed for their biggest annual drop in years.

BYD and other Chinese carmakers are facing slowing demand and intense price competition domestically, making a pivot overseas — where their budget-friendly, technology-focused models make more money — critical to survival.

But their popularity is creating new hurdles, particularly in Europe where Chinese automakers outsold Japanese rivals for the first time ever for a full quarter. Registrations of Chinese-branded cars roughly doubled to make up 12.7% of total sales across the region, led by hybrids, according to market researcher Dataforce. Five years ago, Chinese brands accounted for barely 1% of European sales.

The European Union has already imposed extra tariffs on China-made battery-electric vehicles, and this month agreed in principle to curb fast-growing imports of hybrid cars from China. Plug-in hybrid vehicles, which can free drivers from range anxiety while economically friendly during the oil price hike since the Middle East conflicts, has accounted for nearly half of BYD’s passenger car sales, and underpinned the company’s EU push, where charging infrastructure has not been widely built up.

The restrictions are spurring BYD to spend billions of dollars to build a physical presence in Europe. Its first factory in the region, located in Hungary, is set to start mass production in the fourth quarter, Executive Vice President Stella Li, who heads the company’s overseas business, said this month. France and Spain are on the shortlist for future plants, and the carmaker want to have a European workforce of about 40,000 by the end of the decade, she said.

Despite an increase in total volumes sold in the third quarter, the company has only delivered 3.13 million cars in the first nine months of 2026, trailing the 3.26 million units in the same period a year ago.

It also means the company has to sell an average of 623,000 units in the three remaining month of the year to meet the lower end of its 5 million to 5.5 million goal, 80% more of the monthly average in the first nine months.

However, the company did see a recovery in its home deliveries as the production capacity of its latest generation of blade batteries ramped up, with August and September local shipments marking month-over-month increases. Production line renovations have kept the batteries falling short of demand, and therefore curbing the deliveries, while shipping capacities has constrained its overseas deliveries, the company said in an investor event in August.

The company is betting on the fast-charging batteries to further boost the sales, and has brought the first sport utility vehicle installed with the latest generation of the batteries to Europe during the Paris Motor Show. Li also confirmed earlier this month that has ordered 10 more vessels, in addition to its operational fleet of eight.

Yet domestic pressure is set to continue into next year. China’s total sales are set to tumble 22% this year to just 18.5 million vehicles, the Passenger Car Association estimates. The group expects average growth of 2% next year, a pace that it describes as a weak recovery rather than a strong rebound.

Some companies, particularly foreign brands, are even worse off. Volkswagen AG, Europe’s largest carmaker, on Thursday reported a loss for the latest quarter, largely because of China.

Reporting higher profits hasn’t been enough to satisfy investors lately. Shares of Geely Automobile Holdings Ltd., BYD’s top competitor in China, fell in Hong Kong trading earlier in the day despite the company reporting higher sales and profits.