BYD's Second-Quarter Net Profit Plunges 30%, Industry Leader Not Immune in Price War

On the evening of August 29th, BYD released its semi-annual financial report for 2025. On the surface, the results remain impressive, with revenue reaching 371.3 billion yuan, a year-on-year increase of 23%, and net profit attributable to shareholders amounting to 15.5 billion yuan, up 14%.

After breaking down the quarterly data, it was found that the net profit in the second quarter was only 6.36 billion yuan, a year-on-year decline of about 30%. This is the first time since 2022 that BYD has experienced a decline in quarterly profit. Bloomberg analysis pointed out that the battle for market share has evidently become so intense that even leading brands can hardly claim to be safe.

Despite strong overseas sales, BYD's net profit for the three months ending June 30 was only 6.36 billion yuan (892 million USD), failing to achieve the modest growth expected by analysts. Heavy discounting caused BYD's gross margin to drop from 18.8% in the first half of 2024 to 18%, although this figure remains at the forefront of the industry, higher than competitors such as Zhejiang Geely Holding and Chery Automobile.

A BYD Seal near a BYD dealership in Valencia, Spain

BYD's second-quarter performance decline shocked the market, as its global expansion pace has accelerated this year, making significant progress in markets such as Brazil (accounting for about one-third of its international sales), Australia, Singapore, and parts of Europe. In the first half of this year, BYD's overseas revenue (excluding Hong Kong, Macau, and Taiwan) increased by 50% year-on-year, reaching 135.4 billion yuan.

Research firm Sanford C. Bernstein released a report over the weekend stating that BYD's declining profit margins are "scars of competition," noting that despite growth in total overseas sales, margin pressure persists. "Increased promotional efforts have not led to the expected sales growth," analysts including Eunice Lee wrote, adding that increased capital expenditure has further dragged down profit margins.

Bernstein maintains its "outperform" rating but lowers the target price from HKD 133 to HKD 130. Before the earnings report, BYD's stock closed at HKD 114.40 last Friday in Hong Kong.