BYD Co., China’s leading electric vehicle (EV) manufacturer, said yesterday it was large enough to shake off the impact of a bruising price war and faltering demand in China.
BYD’s large scale would help it maintain strong profit margins despite a price war and the end of EV subsidies, said chairman and founder Wang Chuanfu in Hong Kong yesterday.
In December, China ended its tax cuts and electric vehicle subsidies that were worth close to US$15 billion in 2021.
Wang’s comments came as some 40 brands of electric and internal combustion engine vehicles in China have offered aggressive discounts to create demand, following Tesla Inc.’s move to cut prices for its China-made cars into what has become a price war over market share.
BYD reported that net income more than quintupled last year after it sold a record number of EVs. Net income soared 446% to 16.6 billion yuan (US$2.4 billion), the company said Tuesday.
The company posted a quarterly profit for October-December of 7.3 billion yuan, up from 602 million yuan a year earlier.
The gross profit margin for automobiles and related products, which accounted for 77% of BYD’s revenue in 2022, increased to 20.4%, well above the 3.7% margin in 2021.
BYD sold 1.86 million electric and plug-in hybrids in 2022, more than the previous four years combined and accounting for about 30% of all new-energy vehicle sales in China. Half of them were battery-only EVs. In comparison, Tesla delivered 1.31 million EVs.
BYD stopped producing cars powered entirely by fossil fuels last year.
China’s new-energy vehicle market has entered a “full-expansion phase,” Wang said. BYD was able to post good results despite immense challenges such as chip shortages, slowing sales and weaker demand, he added.
Warren Buffett-backed BYD is stepping up its push overseas, including into Norway, Denmark, the U.K., Thailand and Australia.