WionDrive News Desk 
Chinese electric vehicle (EV) manufacturer BYD has reported an improvement in its net profits for the second quarter of 2024, despite leading an extended price war characterised by substantial discounts on its most popular models. This financial success is attributed to the company’s expanded market dominance in the EV sector.
According to a stock exchange filing, BYD’s net profit reached 9.1 billion yuan (USD 1.3 billion) in the April-June quarter, representing a 32.8 per cent increase compared to the same period last year. This growth rate is the highest the company has experienced since the end of 2023. Concurrently, BYD’s revenue saw a 25.9 per cent increase, climbing to 176.2 billion yuan.
The sale of automobiles and related products constituted a significant 75.8 per cent of BYD’s overall revenue. The gross margin for this segment rose to 23.9 per cent in the first half of 2024, marking a 3.3 percentage point increase from the same period in the previous year. However, it’s worth noting that the overall gross margin experienced a decline in the second quarter, dropping to 18.69 per cent from 21.88 per cent in the first quarter, based on Reuters’ calculations derived from BYD’s fiscal disclosure.
BYD has established a commanding lead in the Chinese electric and plug-in hybrid vehicle market. This success is largely attributed to the company’s vertical integration strategy, which involves using key components, such as batteries, manufactured in-house. The company has also been expanding its global footprint, with plans to establish manufacturing facilities in Europe and Mexico. However, BYD faces a challenge in the form of a 17 per cent additional tariff for exporting EVs from China to European Union countries.
Rosalie Chen, an analyst at Third Bridge, commented on BYD’s market position, stating, “For vehicles priced (in China) under 150,000 yuan (USD 21,046), BYD holds absolute pricing power because, aside from glass and tires, it manufactures almost everything in-house.” This observation is particularly significant given that over half of the cars sold in China are priced below USD 21,000.
In pursuit of a 20% increase in annual sales for 2024, BYD has implemented aggressive discount strategies for its best-selling Dynasty and Ocean series of EVs. This approach aims to solidify the company’s leadership position, which currently accounts for more than one-third of China’s new energy vehicle market.
BYD’s sales performance has been impressive, surpassing the combined sales of Volkswagen’s two joint ventures in China by 14.5 per cent in the first seven months of the year. Industry forecasts from Counterpoint Research suggest that BYD is poised to overtake Tesla as the world’s largest EV vendor this year, with projected market shares of 17.7 per cent and 17.2 per cent, respectively.
However, BYD faces challenges in international markets. The European Union has imposed additional import taxes on Chinese EVs, arguing that their production has benefited from extensive subsidies – a claim that China’s commerce ministry denies. Similar measures are being considered or implemented by Canada and the United States.
Despite these hurdles, BYD’s overseas shipments have shown significant growth, accounting for 11.9 per cent of its total car sales in the first seven months of 2024, nearly doubling the figure from the same period last year.
To enhance profitability, BYD is focusing on increasing sales of its three premium brands – Denza, Fangchengbao, and Yangwang. These brands collectively contributed to 5 per cent of BYD’s total sales in the first half of the year.
Recognising the need to keep pace with competitors, BYD has intensified its efforts in developing intelligent features, particularly advanced autonomous driving systems. This initiative has led to substantial investments in hiring thousands of engineers. However, for its premium models, BYD still relies on external suppliers for these advanced features, utilizing Momenta’s system in Denza cars and Huawei’s technology in the Fangchengbao Bao 8 SUV.
This comprehensive overview highlights BYD’s strong market position, financial performance, strategic initiatives, and the challenges it faces in an increasingly competitive and regulated global EV market.
