BYD surges ahead with record sales despite price war and tariff hurdles

While Chinese brands with a solid international sales strategy face significant hurdles over import tariffs, their financial health remains in top shape. After the Geely Group announced record profits earlier this month, BYD also recorded baffling profit growth.

Despite slashing prices on its electric vehicles in China, BYD’s net income nearly doubled in the second quarter of this year compared to the first, driven by record vehicle sales.

The Chinese automaker posted a net income of RMB 9.06 billion (€1.14 billion) in that period, marking a 33% increase year-over-year. The jump from the first quarter is a whopping 98% jump. However, revenue (€1.93 billion) did not match the record final quarter of last year (€1.42 billion).

The impressive results came despite a 3% dip in gross margins due to China’s intense EV price war. BYD’s gross margins fell to 18.69% from 21.88% in Q1, yet the company reported a solid 20% gross margin for the first half of 2024, up from 18% the previous year.

Record sales drive profit growth

BYD sold a record 986,720 new energy vehicles (NEVs) in the second quarter, including EVs and hybrids, a 57% increase from Q1. The company’s first-half net income rose 24% to €1.71 billion. BYD aims to sell approximately 3.6 million electric and plug-in hybrid cars in 2024.

While most of BYD’s sales remain in China, the automaker is rapidly expanding overseas. To accelerate its international presence, BYD has established manufacturing plants abroad, including its first facility in Thailand, an emerging EV market.

Additional plants are planned in Mexico, Hungary, Brazil, Turkey, and Pakistan as part of a broader strategy to bypass the tariffs mentioned above and capture new markets.

These moves are necessary, as Canada recently imposed a 100% tariff on Chinese EV imports, but BYD remains undeterred. The company has already met with Canadian officials and dealers as it explores entering the market despite the stiff levies.

BYD is also setting up data centers across Europe to manage data from its autonomous and internet-connected vehicles, addressing data privacy concerns and aligning with the practices of competitors like Xpeng.

Bigger than Nissan and Honda

Driven by these record sales, BYD has overtaken Nissan and Honda to become the world’s seventh-largest automaker. The company aims to further expand its global footprint, with overseas sales expected to account for nearly half of total sales in the future.

According to Executive Vice President Stella Li, this objective is targeted for the end of the decade. Strategic partnerships and marketing initiatives also support BYD’s international ambitions.

The automaker recently signed a deal with Uber to supply 100,000 EVs for its ride-hailing platform. It was a major sponsor of the Euro 2024 and Copa America soccer tournaments, boosting its brand awareness.