BYD, a major electric car manufacturer in China, is experiencing a tough period marked by declining profits. The company’s profit for the first quarter of the fiscal year (April-June) declined by 30%. Net income reached 6.36 billion yuan (892 million dollars), while revenue also fell short of expectations at 200.9 billion yuan. This performance is the most challenging for BYD, despite its significant role in the Chinese EV market.
The company’s troubles are attributed to the intensifying price war within the Chinese EV sector. In its efforts to compete with Tesla and other companies, BYD has been offering substantial discounts on its cars, impacting its profit margins. The gross margin decreased to 16.3%, the lowest level since the beginning of 2023. This has led to the realization that maintaining high sales volumes is proving to be an expensive endeavor.