China’s EV Maker BYD Sees First Net Profit Decline in Four Years as Price War Hits Margins

According to The Financial News, BYD, which has led China’s electric vehicle market, is now under dual pressure from slowing growth and weakening profitability. Despite rising sales volumes, intensifying price competition is clearly eroding its earnings. As overseas media and industry sources reported on the 28th, BYD posted net profit of 32.6 billion yuan (about 6.3 trillion won) last year, down roughly 19% from the previous year. The figure fell short of the market consensus of 35.4 billion yuan (about 6.8 trillion won) and marked the first annual decline in net profit in four years.
Revenue in 2023 edged up to 803.9 billion yuan (about 155 trillion won), but growth was limited to 3.5%, the lowest rate in six years. The company is seeing its topline expansion slow while profitability deteriorates at the same time.
The pressure was even more evident in the fourth quarter. Net profit for the October–December period came to 9.3 billion yuan (about 1.8 trillion won), more than 38% lower than a year earlier, extending a decline that has now lasted three consecutive quarters. Analysts view this as the result of the burden from BYD’s aggressive pricing strategy feeding through to its earnings.
Industry observers point to overheated competition in China’s domestic market as the main culprit. BYD has overtaken U.S. brand Tesla in sales volumes through large-scale discount campaigns, but many analysts say this has come at the cost of severely damaging its profitability.
In fact, BYD’s sales of new energy vehicles (NEVs) rose to about 4.6 million units last year. However, the growth rate slowed to around 7%, a sharp deceleration compared with growth in the 40% range the previous year.
The competitive landscape is also worsening rapidly. Latecomers such as Geely Automobile and Leapmotor are boosting both their technological capabilities and price competitiveness, making the market even more fiercely contested. On top of that, the Chinese government’s reduction of purchase tax incentives for NEVs is adding further pressure.
The slowdown has become even more pronounced this year. Global sales in January and February dropped by more than 35% from a year earlier, marking the steepest decline since the pandemic. BYD’s ranking in China’s domestic sales also slipped to fourth place, signaling a weakening grip on the market.
The deterioration in profitability has also affected the organization. As of the end of last year, BYD had about 860,000 employees, more than 10% fewer than a year earlier. This is seen as a move to cut costs and streamline its structure.
Even so, there is still room for growth overseas. BYD’s overseas sales reached 1.05 million units last year, jumping more than 150% and delivering a meaningful result. In response, the company has set this year’s overseas sales target at 1.3 million units and plans to focus on expanding its presence in global markets.
The chairman of BYD said, “Competition in the new energy vehicle industry has reached an extreme level,” adding, “We are now effectively in a battle for survival.” His remarks suggest that the electric vehicle market has moved beyond a simple growth phase and entered a phase of intense price competition.



vrdw88@fnnews.com Kang Jung-mo Reporter