BYD’s profit suffers amid fierce price war in China’s EV market

BYD, a Chinese electric vehicle (EV) manufacturer, has encountered a tough start to the year, with its first-quarter earnings showing the impact of a price war and slowing EV demand in the world’s largest auto market. The company posted its weakest quarterly profit growth since 2022, with net profit up 10.6% at 4.57 billion yuan ($631.08 million) and revenue growing by 4% to 124.94 billion yuan, according to a stock market filing.

The results come as BYD faces intense competition, particularly from Tesla, which recently reported its first quarterly revenue fall since 2020. BYD had briefly overtaken Tesla as the world’s top EV seller last year but has now handed back that title. The company has been navigating a challenging market, marked by a price war and slowing consumer demand.

With a range of brands at different price points, BYD has been trying to move upmarket while also offering discounts to attract consumers in a sluggish economic recovery. The company recently unveiled the U7, its third ultra-luxury model under the Yangwang brand, at the Beijing auto show. Its premium brand Denza also showcased its first sedan at the event.

Furthermore, the price war in China has seen BYD and over 40 other brands slashing prices since February on their latest models by 5%-20%. This intensified competition has put pressure on profitability, with analysts warning that further price cuts could turn the industry’s profitability negative.

Despite these challenges, BYD remains ambitious, targeting a 20% jump in annual sales in 2024 from its record-breaking sales last year. The company is facing increasing competition from local EV startups, which are betting big on an all-electric future.

Read more on BYD celebrating 7 millionth new energy vehicle milestone