BYD Posts Shock Profit Drop as Price War Hits Chinese EV Maker
(Bloomberg) -- BYD Co. reported a surprise drop in quarterly profit due to fierce price competition in its home market, piling more pressure on the Chinese carmaker already poised to miss its annual sales targets.
Net income slumped 30% to 6.36 billion yuan ($892 million) in the second quarter, missing analysts’ estimates of a modest increase. Revenue of 200.9 billion yuan also fell short of expectations. Heavy discounting in China contributed to gross margin shrinking to 16.3%, the lowest quarterly result since 2023.
The world’s largest electric-vehicle maker sold 2.15 million vehicles in the first half, up 33% from a year earlier. But that’s just shy of 40% of its annual target for 5.5 million battery-electric and plug-in hybrid cars, meaning BYD has to make up lots of ground to hit its goal.
The disappointing results make what was already a challenging second half even more difficult for BYD. The carmaker’s deep discounting earlier this year put it at the center of an industry reckoning as Beijing seeks to stamp out the relentless price cuts it fears will put even well-capitalized manufacturers under pressure. So far, the campaign has had little effect, with top brands continuing to cut prices.
BYD also saw a notable shift in the domestic market in the second quarter. While fully electric cars continued to show strong growth, sales of hybrids contracted from a year earlier.
That’s made BYD’s international expansion increasingly important. The company’s Thai unit exported EVs to Europe for the first time, including to the UK, Germany and Belgium, according to Chinese news agency Xinhua.
Net income totaled 15.5 billion yuan in the six months ended June 30, the carmaker said in a filing on Friday. Revenue climbed 23% to 371.3 billion yuan in the first half of the year.
BYD shares fell earlier this month when it reported sputtering sales growth for July that raised doubts about whether it would hit the annual goal.
The softer sales were due to weaker domestic demand in the summer low season and stricter pricing discipline, HSBC analysts led by Yuqian Ding wrote in a note before the earnings.
(Updates with second quarter earnings details throughout.)
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