Chinese electric vehicle manufacturer BYD is navigating a complex period of contrasting fortunes. While the company celebrates remarkable success in its European expansion efforts, its core domestic operations in China are experiencing significant strain. An intense price war and contracting profit margins have compelled the automaker to implement substantial strategic corrections, creating considerable implications for investors.
Internal Sales Target Sharply Reduced
In a significant internal revision, BYD has reduced its 2025 sales target by a substantial 16 percent. The company now aims to sell 4.6 million vehicles, down from its original goal of 5.5 million. This adjustment represents the slowest annual growth projection the company has set in five years. Selected suppliers were informed of this change last month. By the end of August, BYD had achieved just 52 percent of its initial target.
These figures highlight the challenging market conditions following several internal downward revisions.
European Expansion Offers Strategic Diversification
As its domestic market weakens, BYD is aggressively pursuing growth in Europe. The company recently launched the Seal 06DM-i model, featuring a super hybrid system, as part of its strategic diversification initiative. The European offensive has yielded impressive results: in July 2025, BYD surpassed Tesla in new European registrations with 13,503 units—a remarkable 225 percent increase compared to the previous year.
Home Market Operations Under Severe Pressure
The dramatic revision to BYD’s sales target stems primarily from a fiercely competitive pricing environment within China. Second-quarter profits plummeted by 30 percent, marking the first decline of this magnitude in over three years. Company officials acknowledged that intensified price competition and substantial marketing expenditures have significantly impacted profitability.
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An alarming development has been the consecutive monthly production decline—an unprecedented occurrence since 2020.
Mixed Financial Signals Create Investor Uncertainty
Recent financial results present a complex picture for market participants:
- H1 2025 Revenue: 371.3 billion yuan (+23%)
- H1 2025 Net Profit: 15.5 billion yuan (+14%)
- Q2 2025 Net Profit: 6.36 billion yuan (-30%)
- 2025 Overseas Target: Approximately 1 million vehicles
The international business segment generated 135.36 billion yuan during the first half of the year, accounting for 36.5 percent of total revenue. Despite ambitious overseas targets of 800,000 to 1 million vehicle exports, international markets cannot yet compensate for the massive scale of BYD’s domestic operations.
The critical question remains whether BYD can scale its European strategy rapidly enough to offset challenges in its home market.
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