Backed by Warren Buffett’s Berkshire Hathaway, BYD posted a net profit of 4.57 billion yuan (US$631 million) in the three months to March, 47.3 per cent lower than the quarter ended December 2023, according to filings to the Hong Kong and Shenzhen stock exchanges on Monday. Revenue declined 30.6 per cent quarter on quarter to 124.9 billion yuan.
On a year-on-year basis, net profit in the first quarter grew 10.6 per cent.
“The first-quarter performance was largely affected by the overall weak market sentiment and steep discounts BYD offered Chinese customers,” said Ivan Li, a fund manager at Loyal Wealth Management in Shanghai. “If the price war continues, BYD’s profit margin will narrow further and drag down the profitability for the whole year.”
The Shenzhen-based carmaker delivered 624,298 pure electric and plug-in hybrid vehicles from January to March, compared with 944,254 units in the fourth quarter of 2023.
Most of its cars, priced between 100,000 yuan and 200,000 yuan, are sold in mainland China, the world’s largest automotive market, where EV sales account for about 60 per cent of the global total.
China’s EV sector, one of the key growth engines for the national economy, is expected to grow 20 per cent in 2024, slowing from a 37 per cent year-on-year rise recorded last year, according to a forecast by Fitch Ratings in November.
BYD initiated a fierce price competition on the mainland in February as it strived to retain market share.
In the first quarter, the company held a 33.1 per cent share of the Chinese EV market.
BYD aims to deliver 20 per cent more electric cars in 2024, or 3.6 million units, Wang told an investors’ conference in March. That would be significantly slower than the 62 per cent growth recorded in 2023.
03:11
Cheap EV alternative to Tesla and BYD takes off in small-town China
Cheap EV alternative to Tesla and BYD takes off in small-town China
Prices for 50 models across a range of brands have dropped by 10 per cent on average as the price war escalated, Goldman said.
