BYD Faces Mounting Pressure as Domestic Sales and Profits Decline

The Chinese electric vehicle manufacturer BYD is confronting its most severe profitability challenge in recent years. Fresh financial results reveal a troubling pattern, with the company’s third-quarter profits plummeting by 33% compared to the same period last year. This marks the second consecutive quarter of contracting margins, but the situation grows even more concerning with the first quarterly revenue decline in over five years.

Key Metrics Signal Deepening Troubles

A closer examination of the quarterly figures presents a sobering picture for investors:

• Quarterly profit fell to 7.82 billion yuan, a 33% decrease
• Revenue declined by 3.1% to 195 billion yuan
• The company’s market share in China contracted significantly from 18% to 14%
• Vehicle sales for October dropped 12% to 441,706 units

This deteriorating performance stems primarily from an intense price war within China’s EV sector. To maintain competitiveness, BYD has been compelled to implement successive rounds of price reductions on popular models such as the Qin Plus, creating a vicious cycle that continues to erode profitability.

Strategic Retreat and International Ambitions

In a notable strategic reversal, BYD’s leadership has substantially revised its sales target for 2025 downward by 16%. The company now aims to sell 4.6 million vehicles, retreating from its previous ambitious goal of 5.5 million units. This recalibration underscores the severe competitive pressures impacting the automaker’s domestic operations.

Despite these domestic headwinds, a potential growth avenue is emerging overseas. BYD has outlined plans to double its international deliveries of electric and plug-in hybrid vehicles compared to 2024 levels, with European markets showing particular promise.

Should investors sell immediately? Or is it worth buying BYD?

European Expansion Offers Glimmer of Hope

While BYD’s home market struggles, its European operations are experiencing remarkable growth. During the first eight months of the year, sales across Europe surged by an impressive 280%. The company achieved a new milestone in October, exporting 83,524 vehicles to international markets—a record high for the manufacturer.

The Chinese automaker’s European strategy appears increasingly ambitious. BYD intends to expand its network of European showrooms to 2,000 locations by 2026, effectively doubling its current presence. Spain has emerged as the leading candidate to host what would be the company’s third manufacturing facility in Europe.

The fundamental question for investors remains whether this international expansion can sufficiently offset the declining performance in BYD’s core Chinese market. The company’s operational revenue reached 194.98 billion yuan, representing a year-over-year decrease of 3.05%. While BYD maintains a 12.75% growth rate in the annual trend, the current quarterly trajectory raises significant concerns.

Market participants now face a critical investment decision: whether to back BYD’s international growth strategy or retreat in light of deteriorating domestic sales and shrinking profit margins. The combination of reduced sales targets and persistent pricing pressure creates a challenging outlook for the electric vehicle giant.