BYD Posts Over 80% Year-on-Year Increase in Profit Amidst Global Economic Challenges
BYD, the Shenzhen-based Chinese automaker, reported a significant leap in profitability for its fiscal year 2023, marking the first full financial report since it surpassed Tesla to become the world’s leading electric vehicle (EV) seller. The company announced a net profit of 30 billion yuan ($4.2 billion), representing an increase of more than 80% from the previous year’s figure of 16.6 billion yuan ($2.3 billion).
Despite the impressive financial performance, BYD acknowledged facing a “complex external environment,” citing global inflation and slowing growth in major economies. In Q4 2023, the company sold 525,409 battery electric vehicles (BEVs), while Tesla managed to sell 484,507 units in the same period.
Record Sales and Market Dominance
BYD reported a total sales volume of 3.02 million vehicles in 2023, marking a 62% year-on-year increase. This impressive figure includes sales of 1.44 million plug-in hybrids, which Tesla does not offer in its portfolio. However, Tesla still sold more BEVs overall during the year (1.8 million) than BYD’s 1.57 million.
One factor contributing to BYD’s growth is the affordability of its cars compared with Tesla. Its entry-level model, priced at just over 100,000 yuan ($14,283) in China, undercuts Tesla’s cheapest offering, the Model 3, which starts at nearly $39,000.
Intensifying Competition and Price Wars
Despite slim profit margins, the price war among Chinese automakers continues unabated. In early 2024, BYD reduced the starting price of its most affordable EV, the Seagull hatchback, by 5% to 69,800 yuan ($9,670), while other major Chinese players like Geely, Chery, and XPeng Motors have also announced price reductions in recent weeks. The Chinese passenger car industry recorded an average profit margin of 5% for the first 11 months of 2024, down from 5.7% in 2023 and 6.1% in 2022.
Despite the challenges, BYD’s strong financial performance demonstrates its resilience and adaptability to the ever-evolving automotive market. The company’s continued growth is a testament to its innovative approach, competitive pricing, and commitment to producing high-quality electric vehicles for an increasingly global customer base.
