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BYD, China’s largest EV manufacturer, saw its earnings soar to remarkable heights in the first half of 2023. As per a stock market filing by the company, its net profit more than tripled during this period, driven by record deliveries, cementing its position as the best-selling car brand in China.
Between January and June 2023, the company’s net profit soared from 3.59 bn yuan ($492.21 mn) to an impressive 10.95 bn yuan ($1.50 bn), showcasing an expansion of over 204.68% year on year.
Additionally, BYD’s revenues during the same timeframe saw a 72.17% year-on-year spike, amounting to 260.12 bn yuan ($35.66 bn). Also, deliveries in the first half of 2023 rose by 96% year on year to 1.26 million units. Meanhwile, the company reported a net profit of 6.82 bn yuan ($935.07 mn) for the quarter spanning from April to June, marking a substantial increase of 144.7%.
The fortunes of BYD have been on the rise for some time now, as previously, the company outsold Volkswagen in the Chinese car market for the first time in October 2022 to become the highest-selling car brand in the country. This is all the more significant as China boasts the largest auto market in the world, and 50% of all EV sales come from the country.
“Rising sales volume drove BYD’s earnings in the first half and consolidated its position as China’s top EV builder…Escalating competition and potential rise in material costs carry risks for BYD’s further growth,” said Huang Chengbao, an analyst at Guolian Securities, in a research note.
BYD resilient amid EV price war
While BYD reported a net profit increase of more than threefold, the company has encountered pressure due to competitive pricing from both domestic rivals and Tesla in the recent past. Spearheaded by Elon Musk, Tesla initiated a price war, drastically reducing its car prices by nearly half since October 2022.
Despite this, BYD has performed better than the US EV manufacturer. The Chinese company’s gross profit margin for the quarter ended June 2023 was 18.73%, compared with 17.86% in the first three months of this year. This is in stark contrast to Tesla, which recorded a decline in quarterly automotive gross margin during the same period.
In tandem with Tesla, fellow homegrown competitors like Nio and Xpeng have implemented price reductions. This price competition has extended its reach to encompass the entire electric vehicle sector, even involving battery manufacturers like CATL. These price adjustments align with the backdrop of consumers exercising caution in their spending habits, a response to a less robust than anticipated economic rebound in China post the lifting of stringent Covid measures.
“Under a severe market environment, business (BYD) still showed strong resilience and has entered a new cycle of high-quality rapid growth,” said Chinese billionaire and owner of BYD Wang Chuanfu in a statement. He also stated that the company has actively increased its market share and continued to optimise its business structure.
Moving ahead, the company is venturing beyond its automotive domain, seeking expansion into other sectors. On August 28, 2023, BYD disclosed its plan to acquire the mobile electronics manufacturing business of U.S.-based Jabil at an estimated value of $2.2 bn.
