Chinese electric vehicle manufacturer BYD saw a significant decline in both net profit and revenue in the first quarter compared to the previous quarter. Net profit dropped by over 47% quarter-on-quarter. Due to a slowdown in electric vehicle demand and intense price competition, BYD’s revenue growth slowed to its lowest level in nearly four years.
Focusing on Chinese electric vehicle news, CnEVPost reported that BYD’s report released on Monday showed a first-quarter net profit of 45.7 billion yuan ($6.31 billion), an increase of 10.6% year-on-year, but a decrease of 47.33% compared to the previous quarter (Q4 2023). The company’s revenue was 1249.4 billion yuan ($172.5 billion), a nearly 4% year-on-year increase, but a 30.6% quarter-on-quarter decrease.
One of the main reasons for the quarter-on-quarter decline in revenue and net profit is a decrease in car sales. According to data previously released by BYD, in the first quarter, BYD’s sales of new energy vehicles reached 626,263 units, a 13.44% year-on-year increase but a 33.71% decrease from Q4 2023.
BYD is the biggest Chinese competitor of American electric car giant Tesla. With a lineup of brands at different price points, BYD has intensified its efforts to enter the high-end market while also increasing discounts to compete for cautious consumers in the sluggish economic recovery.
According to Reuters, price wars are also a factor weakening corporate profitability. China’s price wars have been prolonged and escalating, with over 40 car brands participating. Goldman Sachs predicted in a recent research report that unit profits for China’s new energy vehicles this year will be lower than in 2023, and stated that if prices further decrease, the industry’s profitability could turn negative.
BYD aims to increase annual sales by 20% in 2024 based on the record-breaking level last year, but it faces pressure from local electric vehicle brands.