BYD's Q2 Profit Drops 30%, Domestic Price War Sparks Concerns Over Margin Growth

BYD, the world's top-selling EV maker, reported a 30% plunge in Q2 profit to $892 million, missing analyst expectations. The Chinese company's revenue also fell short at $892 million. The stumble is attributed to a brutal domestic price war that has slashed margins and raised doubts about BYD's ability to hit its 5.5 million unit sales target for 2025. BYD is leaning harder into exports, with its Thai arm shipping EVs to Europe. However, momentum at home is losing steam fast, and the road ahead looks bumpy.

Chinese electric vehicle (EV) manufacturer BYD Co. Ltd. reported a substantial 30% plunge in its second-quarter (Q2) net profit, falling to $892 million, according to a stock market filing [4]. This marked the first time in over three years that BYD's net income has declined. Despite a 14% increase in revenue to $200.9 billion, the company's financial performance was weighed down by a slowdown in its domestic market and tighter government scrutiny of industry price wars [1].

The slowdown in domestic sales momentum is evident, with July marking a third straight monthly decline and the first production dip in 17 months. BYD sold 2.5 million cars in the first seven months of 2025, trailing its ambitious target of 5.5 million vehicles for the year [1, 2]. The company has been leaning heavily into exports, particularly to Europe and Southeast Asia, to offset the weakness in its home market [1].

However, the export push has not been sufficient to mitigate the broader challenges. BYD's working capital deficit widened to $122.7 billion by June, and its debt-to-asset ratio edged higher to 71.1% [1, 2]. The company's first-half 2025 net profit rose by 13.8% to $15.5 billion, with revenue up by 23.3% to $371.3 billion [1]. These figures, while positive, indicate that BYD is facing significant headwinds in its quest to meet its ambitious sales targets.

Analysts remain pessimistic about BYD's ability to meet its full-year targets. Rosalie Chen, an analyst at Third Bridge, stated, "The outlook for BYD meeting its ambitious full-year targets appears pessimistic" [2]. Nomura analysts expect BYD to sell between 5 million and 5.2 million cars this year, significantly lower than the company's goal of 5.5 million units [2].

BYD's challenges are not limited to its home market. Tesla, its primary global competitor, reported a 40% decline in European new car registrations in July, while BYD saw a monthly surge of 225% [3]. However, Tesla's struggles in Europe are part of a broader trend, with Chinese brands commanding a record market share of over 5% in the first half of 2025 [3].

BYD's aggressive expansion plans, including building its own fleet of cargo ships to deliver vehicles to Europe and South America, highlight its commitment to global growth [5]. The company aims to move half of its sales outside of China by 2030, positioning itself as a dominant global automaker.

References:

[1] https://finance.yahoo.com/news/byd-profit-falls-q2-china-143405156.html
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3UL0AF:0-byd-s-quarterly-profit-falls-for-first-time-in-3-1-2-years-as-price-wars-bite/
[3] https://www.cnbc.com/2025/08/28/tesla-europe-sales-plunge-40percent-chinese-ev-rival-byd-up-225percent.html
[4] https://www.reuters.com/markets/asia/chinese-ev-maker-byds-quarterly-profit-falls-first-time-3-12-years-2025-08-29/
[5] https://finance.yahoo.com/news/byd-big-plans-sell-half-103000479.html