BYD shares fall as profit slump piles pressure on EV giant
Analysts have attributed its sales slowdown primarily to efforts to reduce inventory ahead of its rollout of 2026 models
BYD shares tumbled on Friday (Oct 31) after the carmaker reported a decline in third-quarter net income and revenue, missing analyst expectations and underscoring that even the electric vehicle (EV) giant isn’t immune to the brutal competition in the world’s largest automotive market.
The company’s Hong Kong-listed shares fell as much as 6.4 per cent in early trading on Friday, following earnings late Thursday in which quarterly net income fell 33 per cent from a year earlier to 7.8 billion yuan (S$1.4 billion). Total revenue in the three months ended Sep 30 dropped about 3 per cent to 195 billion yuan, missing analyst estimates for 216 billion yuan.
“We look for neutral to slightly negative knee-jerk stock reaction to anemic Q3 results,” Morgan Stanley analysts including Tim Hsiao said in a note. BYD’s vehicle-unit profit was 6,100 yuan in the quarter, below Morgan Stanley’s estimate of 6,500 yuan, despite a recovery from the previous quarter.
The Shenzhen-based company is battling to remain dominant in its home market of China, where a prolonged price war is triggering government concerns that cutthroat competition could damage product quality. BYD’s challenges initially came to light when it reported a shock 30 per cent plunge in Q2 profit, and the EV maker has continued to struggle with stalling sales that even saw it lose its title as China’s best-selling carmaker to state-owned SAIC Motor in September.
BYD delivered 1.2 million new-energy vehicles, including pure-electric models and plug-in hybrids, in Q3, down 1.8 per cent from a year earlier. Rivals Geely Automobile Holdings and Chongqing Changan Automobile Co reported increases in sales of 96 per cent and 84 per cent, respectively.
BYD had previously slashed its 2025 sales goal by 16 per cent to 4.6 million units, according to media reports. It didn’t release an official figure in Thursday’s results.
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The carmaker’s gross margin contracted during the three months to 17.6 per cent from 21.9 per cent a year ago, although it increased from 16.3 per cent in Q2. That indicates the pressure BYD faces from the prolonged period of discounting that has underpinned its rapid ascent in the Chinese EV market but drawn scrutiny from Beijing.
However, some analysts see the quarter-on-quarter recovery in margins as a positive signal for BYD. The company is “on the path to more improvement”, HSBC analyst Yuqian Ding said in a report. She expects “sequential improvement in volume, margin, and earnings” in Q4, driven by demand recovery in peak season, better product mix and operating leverage.
“With upcoming platform upgrades and strong overseas expansion, we see BYD as well-positioned to regain domestic market share and accelerate global expansion,” she wrote.
Analysts have attributed the sales slowdown primarily to BYD’s efforts to reduce inventory ahead of its rollout of 2026 models. The carmaker’s absolute and relative inventory measures fell month-on-month in September, according to an earlier note published by Citigroup.
“A ‘de-stocked’ BYD could be loved by the market again with its relatively defensive margin trends and cost-advantage nature (versus) peers” if the company’s export mix significantly improves in Q1 2026, analysts including Jeff Chung said in the note.
BYD’s aggressive push overseas is an increasingly important pillar for the company’s growth given the challenges it faces in the domestic market. Overseas sales volume grew 160 per cent from a year earlier in Q3, fuelled by demand across Europe and Latin America, according to figures previously released by the company.
Back home, BYD may also benefit from a potential boom in sales in the final quarter of the year as China moves to phase out some subsidies and tax incentives. Some local governments are already ending programs that had helped EV sales increase.
But over the longer term, the removal of those perks, which often targeted price-sensitive buyers, risks damping purchase decisions and may transfer greater price pressure back to carmakers and dealers, forcing them to either absorb higher costs or initiate deeper discounts to move inventory.
BYD also faces structural headwinds from the increased scrutiny officials are placing on China’s EV sector. The auto sector has been caught up in a broader anti-involution drive as Beijing seeks to end the long-running and brutal price war that’s pushed some firms to the brink. The government’s campaign, though, so far appears to have had only a limited effect on carmakers.
The company is also plowing more investment into research and development, which may contribute to future product updates and its ramp-up of high-end, high-margin models under the luxury Yangwang and Fangchengbao brands next year. BLOOMBERG
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