Chinese EV giant BYD reports its first quarterly profit decline in over three years, squeezed by intense domestic price competition despite robust revenue growth and expanding international markets.
Chinese electric vehicle giant BYD announced a pretty significant 30% dip in its second-quarter net profit, coming in at 6.36 billion yuan (roughly $891 million). This is notable because it marks its first quarterly profit decline in over three years. The profit squeeze is happening despite a 14% boost in revenue, which climbed to about 201 billion yuan. According to BYD, the cut in profits is mainly due to the fierce domestic price war within China's EV market, which has pushed margins down quite a bit. They said the ongoing heavy discounting and stiff competition have created what they called an “adverse periodic impact” on the industry’s profitability swings.
This downward trend in BYD’s performance isn’t happening in a vacuum—it actually mirrors broader patterns across China’s EV sector. Over the past two years, prices have fallen roughly 19%. A big factor here is the intensified rivalry among major players, with some models seeing price cuts approaching 30%. Authorities haven't been idle—they’ve signaled that hefty discounts might attract penalties, trying to tame the wild discounting spree and protect profit margins. Still, despite these efforts, the aggressive pricing continues, making it tough for manufacturers like BYD to maintain their previous levels of profitability.
Even with the short-term profit strain domestically, BYD remains quite optimistic about its long-term growth potential. An important driver for this outlook is its growing international presence. In the first half of 2025, the company reported a 14% increase in net profit, reaching 15.5 billion yuan, with total revenue jumping 23% to 371.3 billion yuan, fueled mainly by record-breaking vehicle sales in the new energy segment. Interestingly, their European operations have expanded quickly, with July registrations up a whopping 225% year-over-year—more than 13,000 units, according to the European Automobile Manufacturers Association. This international push is intended to offset narrower margins domestically and tap into the growing global appetite for EVs.
The reaction from the market was pretty immediate. Shares in BYD slid nearly 8% just after their earnings report came out in Hong Kong trading. Analysts pointed out a few things that may have contributed to the profit miss, including a 1 billion yuan special incentive paid to dealers that didn’t quite spur the expected sales boost, and regulatory crackdowns on payment terms with suppliers, which added extra pressure on earnings. The quarterly profit of 6.4 billion yuan fell well short of analysts’ estimates, which hovered around 10.7 billion yuan. This discrepancy underscores some of the tough financial realities even for industry giants under fierce competition.
All this price competition has wider implications—not just for BYD or China’s EV industry, but also for the global automotive supply chain. By driving prices down domestically, local manufacturers are seeing their gross margins take a hit, which could limit their ability to pour money into R&D or expand their operations profitably. On the upside, consumers benefit from lower costs, potentially speeding up EV adoption. But industry experts warn that if discounts last too long, it could destabilize the market and threaten long-term sustainable growth.
Looking ahead, BYD’s strategy of aggressive overseas expansion coupled with continuous innovation in new energy vehicles seems crucial. Their ability to juggle keeping a solid hold on their domestic market share while growing profitably abroad will likely shape how they stand up in the rapidly changing global EV scene. Honestly, it’s going to be interesting to see how they balance these challenges and opportunities moving forward.
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Source: Noah Wire Services
