Reuters reporting – Chinese electric vehicle (EV) manufacturer BYD reported a 18.6% increase in fourth-quarter profit, marking its slowest growth rate since Q1 2022, amidst a challenging backdrop of diminishing EV sales momentum in the world’s largest auto market.
This deceleration occurs amid an intense price war, with BYD’s net profit reaching 8.67 billion yuan ($1.20 billion) for the last quarter and a 15.1% increase in revenue at 180.04 billion yuan. Over the entirety of 2023, the company, backed by Warren Buffett, saw its net profit surge by 80.7% to 30.04 billion yuan, even as it adopted an aggressive pricing strategy that helped it surpass Tesla as the world’s top EV seller in the final quarter of the year.
BYD’s aggressive pricing included launching a new version of its Seal electric sedan at a 5.3% lower starting price than its predecessor, alongside significant discounts across its model range that have deepened its market penetration but at the cost of its domestic profit margins.
Despite the potential impact on profit margins from BYD’s strategic discounting, the company’s robust cost control measures and an expanding footprint in higher-priced exports are expected to mitigate financial pressures. Analysts project BYD’s exports to reach between 300,000 to 400,000 units this year, following over 240,000 cars exported in 2023, which constituted about 8% of its global sales.
The company also continued to innovate, unveiling the Yuan Up subcompact electric SUV, which highlights its advanced EV architecture designed for extended ranges of over 1,000 km. These developments occur within a broader context of slowing EV and plug-in hybrid sales growth in China, prompting the introduction of incentives by the Chinese government to rejuvenate consumer interest in the sector.
