By
Svetlana Soroka
April 18th, 2024
BYD faces fierce competition from both domestic rivals and Tesla in a relentless price war. The battle for market share led to price cuts from all sides, with the goal of increasing accessibility and product penetration.
Shares of BYD, the Chinese electric vehicle (EV) giant, experienced a remarkable surge of more than 5% following the release of a jaw-dropping Q2 and H1 2023 earnings report. The company’s financials revealed a stunning 204.68% jump in net profit for the first half of the year, with net earnings reaching a staggering 10.95 billion yuan ($1.50 billion), compared to 3.59 billion yuan a year ago.
The company’s performance on the stock market was equally impressive, with Hong Kong-listed shares climbing by 5.6% and Shenzhen stocks enjoying a boost of up to 4.75% on the same day.
BYD Attributes Its Financial Performance to New Energy Vehicle Business
According to a stock filing, the company attributed its robust financial performance to the rapid growth in its new energy vehicle business. The stock filing also showed the company’s revenue for the first six months of the year ending June skyrocketed by 72.72% compared to the same period in 2022.
Experts and analysts alike are lauding BYD’s phenomenal achievement. Jiong Shao, Barclays’ China technology analyst, underscored the company’s robust top-line growth and impressive margins, likening BYD’s first-half gross margin of 18% to Tesla’s own.
“If you look at BYD numbers, clearly the top line growth has been very strong, but we are even more impressed by its margins. BYD’s gross margin in the first half was 18%. That’s Tesla’s gross margin,” said Shao.
BYD Outperformed Tesla in Q2 2023 Sales
BYD’s remarkable financial performance is particularly evident in the company’s record-breaking sales numbers, with the second quarter boasting an astonishing 700,244 units of passenger new energy vehicles sold – a staggering 98% increase from the previous year.
In contrast, Tesla‘s second-quarter global deliveries stood at 466,140 vehicles, clearly showing China’s dominance in the EV industry.
Another analyst, Vivek Vaidya, an associate partner at Frost & Sullivan, highlighted BYD’s strategic positioning in targeting the mass market, addressing a niche that Tesla might struggle to reach.
Vaidya predicted the emergence of China-made vehicles that offer a significant price advantage over Tesla, coupled with impressive features and eye-catching designs.
However, the road to success is not without its challenges. BYD faces fierce competition from both domestic rivals and Tesla in a relentless price war. The battle for market share led to price cuts from all sides, with the goal of increasing accessibility and product penetration.
Despite these pressures, BYD stands strong with an operating margin of 5%, a healthy sign in a market where many players struggle to maintain positive gross margins.
BYD Expands Electronic Business
Beyond automobiles, BYD is expanding its horizons. The company’s electronics division, BYD Electronics, recently announced a strategic deal with a US company, Jabil.
The Chinese company acquired Jabil’s mobile electronics manufacturing business in China for $2.2 billion. The move aims to amplify BYD’s portfolio, extending its business to smartphones, tablet PCs, robots, and more.
BYD’s journey is not just a story of financial success; it’s a testament to resilience, adaptability, and a commitment to innovation.
Navigating through fierce competition, market shifts, and global changes, the company’s remarkable growth trajectory positions it as a key player in the world’s evolving automotive and technology industry.