Shares of BYD Co. experienced a significant decline after the company reported earnings that fell short of analysts’ expectations, while Chairman Wang Chuanfu cautioned about more challenges ahead for China’s electric vehicle sector.
The stock opened 4.6% lower in Hong Kong on Monday.
Domestic Competition
In a letter to shareholders, Wang indicated that competition within the industry has intensified, describing the current state as a brutal ‘knockout stage.’
The outlook follows the automaker’s announcement that its fourth-quarter net income had decreased by 38% to 9.3B yuan ($1.3B), with revenue declining approximately 14% to 237.7B yuan, both missing forecasts.
BYD’s unexpected drop in Q4 profits marks the company’s first annual profit decline in four years and its smallest revenue growth in six years, despite it outselling Tesla Inc. globally.
The company is now grappling with slowing domestic sales, which has compelled it to invest heavily to keep pace with innovative models introduced by competitors such as Xiaomi Corp.
No Recovery in Site
BYD’s profit fell by 19% to 32.6B yuan in FY25, while revenue grew marginally by 3.5% to 804B yuan. The company’s gross margin decreased to a three-year low of 17.7%, down from 19.4% in FY24.
The current year has not shown signs of recovery, with a noticeable slump in sales during the first two months, resulting in BYD losing its long-held position as the top seller in the Chinese market to Geely Automobile Holdings Ltd.
International Upside
The shift has prompted BYD to focus more on international markets, where it has observed robust demand for its vehicles and better profitability per unit sold. Exports have remained resilient in FY26, contrasting sharply with the downturn in domestic sales, as the company aims to sell 1.3M cars outside China this year.
However, this strategy involves substantial investment in overseas factories to mitigate tariffs and trade barriers.
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