BYD, a leading electric vehicle manufacturer in China, is facing considerable difficulties within its home market. The company’s profits for the initial quarter of the fiscal year (April-June) saw a reduction of 30%. The net income reached 6.36 billion yuan (892 million dollars), accompanied by revenue figures that were less than anticipated at 200.9 billion yuan. These results are indicative of the most adverse financial performance for BYD to date, despite its significant role in China’s EV boom.
The company’s challenges are largely a result of intense price competition within the Chinese EV industry. To compete with Tesla and other Chinese companies, BYD has been offering large discounts on its car models. However, these discounts are now significantly affecting the company’s profitability. Gross margins have fallen to 16.3%, representing the lowest values since the commencement of 2023. The primary message communicated to investors emphasizes the fact that maintaining high sales volume is proving to be a costly strategic approach.