BYD’s Quarterly Profit Shrinks for First Time Since 2022, Exposing Market Strains

BYD, China’s largest electric vehicle maker, has reported its first quarterly profit drop in more than three years. Hong Kong filings show first-half net profit of RMB 15.5 billion ($2.17 billion), up from RMB 13.6 billion ($1.91 billion) a year earlier.

But second quarter profit fell to RMB 6.36 billion ($890 million), nearly 30 percent lower than the same period in 2024, despite solid sales. In August, BYD produced 353,090 electric and hybrid cars and sold 373,626.

Both totals slipped slightly from last year, while production fell for the second month in a row. Exports hit a record 80,813, and battery installations reached 23.2 GWh, showing continued global momentum.

Yet growth at home is slowing. China’s EV penetration is close to 50 percent, far higher than the U.S., but subsidies that drove this boom have also led to overcapacity. BYD’s dealer stock rose by about 150,000 vehicles in early 2025.

To cut excess inventory, the company slashed prices by up to 20 percent across 22 models, dropping its Seagull compact to under $8,000. Shares fell as much as 8 percent after the move, underlining investor concern about eroding profitability.

Analysts note that BYD’s strong supply chain enables steep discounts, but the reliance on subsidies leaves the sector vulnerable. The Chinese government has already pressed automakers to cool the price war to protect long-term stability.

BYD is leaning on overseas markets to ease domestic pressure. It recently overtook Tesla in Europe and is building factories in Hungary and Turkey to skirt tariffs as high as 45 percent.

Flooding Europe, Southeast Asia, and South America with low-cost EVs strengthens its global position but raises fears of destabilizing local carmakers.

Tesla faces the same price competition in China but has shifted strategy. It abandoned a $25,000 EV and is investing in self-driving technology and robotics.

Analysts estimate a RoboTaxi could bring in $50,000 to $60,000 a year in profit, compared with about $7,000 on a traditional EV. Energy storage is also expected to surpass its automotive revenue by 2027.

The contrast is clear: BYD’s scale delivers sales but at shrinking margins, while Tesla bets on autonomy and AI to escape commoditization. The outcome will shape not only their future but also how global markets absorb China’s expanding EV output.

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