BYD, the world’s largest electric vehicle (EV) maker, got off to a bumpy start in 2023 as its net profit in the first three months declined 43.5% on a quarterly basis amid a simmering price war in China’s automotive industry. The Shenzhen-based carmaker, backed by Warren Buffett's Berkshire Hathaway, reported that its net profit between January and March fell to CNY4.13 billion from an all-time high of CNY7.3 billion in the fourth quarter of 2022. The drop ended a three-quarter increase in profits, buoyed by surging sales of battery-powered cars. Revenue declined 23.1% to CNY120.2 billion quarter-on-quarter. “BYD suffered from weak demand for vehicles as consumers were expecting further price cuts after huge discounts on both petrol and electric cars were offered by various carmakers,” said Gao Shen, an independent analyst in Shanghai. “The first quarter is normally a low season for vehicle sales because of the weeklong break during the Chinese New Year holiday.”
BYD delivered a total of 508,706 cars in the first three months, down 25.6% from the previous quarter. It dethroned Tesla as the world’s largest electric car builder last year, bolstered by strong sales in China, the world’s largest EV market. Since October 2022, thousands bought BYD’s cars priced below CNY200,000 – about 30% cheaper than premium EVs assembled by Tesla and its Chinese rivals Nio and Xpeng – as they were unnerved by worries about job prospects and incomes.
Tesla spearheaded the price cuts, offering huge discounts on its Shanghai-made Model 3s and Model Ys twice between late October last year and early January this year. The prices hit their lowest levels since the U.S. carmaker’s Gigafactory 3 began operations at the end of 2019. Xpeng, BYD and Aito, an EV brand backed by telecommunications equipment maker Huawei Technologies Co, followed suit. Manufacturers of petrol-powered cars and EVs, such as Volkswagen’s mainland ventures and Dongfeng Honda Automobile, also cut prices to reduce inventory. BYD joined the price war in March, offering discounts of up to CNY20,000 on its Dynasty series. Buyers of its bestselling model Seal, originally priced at CNY212,800, can receive a CNY8,888 subsidy and a further CNY2,500 cash award for switching from petrol-based cars to electric vehicles.
BYD is now closer to becoming China's biggest carmaker in terms of sales because Volkswagen, the current leader, posted a steep drop in deliveries in the first quarter. According to the China Passenger Car Association (CPCA), BYD delivered 508,706 vehicles in the first quarter of this year, up 77% from the same period in 2022. Volkswagen’s two joint ventures on the mainland sold a combined 607,412 units – mostly petrol-powered vehicles – between January and March, down 15.4% year-on-year. Bloomberg reported that BYD already clinched the title of China’s bestselling car brand in the first three months of this year, citing data from the China Automotive Technology and Research Center. It said BYD sold more than 440,000 cars on the mainland, while Volkswagen recorded sales of 427,247 units, the South China Morning Post reports.
