BYD Company Limited, one of the largest EV manufacturers in China. Recently, its stock price has plummeted as a result of the deep discounts it is offering on its vehicles. The company cut the price of its Seal 07 DM-i model by 53,000 yuan (€6,460) – a whopping 34% cut in price. This ambitious step surprised many investors and raised eyebrows with its boldness. Despite this setback, BYD’s stock remains up more than 50% year-to-date on the Hong Kong Stock Exchange, reflecting the company’s robust sales performance.
The business is hitting phenomenal highs! For the fifth month in a row, it established a new high mark for overseas vehicle sales. In Q1 of 2025 already, BYD has sold close to 1 million vehicles. This blistering pace has them well on their way to meet their aspirational target of 5.5 million annual vehicle sales by year’s end. Increasing dealer inventory levels have led to questions about whether this growth is sustainable.
Record Sales and Rising Inventory
In April, BYD sold 380,089 battery electric and plug-in hybrid electric vehicles. This astounding number is no fluke either, as it represents a remarkable 21% increase over last April’s numbers. This milestone is a testament to the increasing demand for BYD’s electric models at home in China and abroad. The firm takes a strategic interest in companies with a focus on Southeast Asia and South America. This strategy is poised to increase revenues because it leverages the most promising markets.
BYD’s growth in sales has been nothing short of spectacular. In fact, over the first four months so far in 2025, their dealer stockpiles have ballooned upwards of 150,000 additional units! This inventory level is about the same as two weeks’ worth of retail sales, which is causing fears in the industry over possible over-stocking. Investors are rightfully concerned to see how this surplus inventory will impact forward sales and profit margins.
Financial Performance and Profit Margins
BYD’s profitability had already been impacted by rising inventory levels as well as recent price cuts. Nevertheless, they proclaimed a net income of 9.15 billion yuan (€1.11 billion) and reached a gross profit margin of 20%. These impressive financial results further highlight the company’s continued focus on profitability, even with intense pricing pressures in the EV space.
BYD has been feeling the heat from increasing competition, particularly from the juggernaut that is Tesla. To supercharge their autonomous driving capabilities, they’re integrating DeepSeek’s R1 AI model. This calculated bet on autonomy places BYD in a head-to-head with Tesla’s Full Self-Driving (FSD) software. With costs made much lower, BYD is ready to appeal to more consumers than ever.
Strategic Expansion Plans
To strengthen its footprint in Europe, BYD has announced a manufacturing facility in Hungary. This facility will maximize production efficiencies. Second, it will help the continent catch up with fast growing demand for EVs in the European auto market. The company plans to focus heavily on international growth. Earlier this month, it announced new pricing schemes with discounts of 10% to 30% on cars from its Ocean and Dynasty range.
Those price cuts have investors’ ears perking up. They might just be a shrewd move to capture market share in the cutthroat EV market. This mixture of technology adoption and competitive, loss-leading pricing strategy has BYD set up for more success.
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