China’s BYD to post big jump in 2023 profit amid record EV deliveries, even as steep discounts dented margins

The world’s largest electric car maker expects earnings for 2023 to jump by as much as 86.5 per cent, buoyed by record deliveries
Its profitability, however, remains far behind rival Tesla because of the American giant’s bigger profit margins

Electric & new energy vehicles

Daniel Renin Shanghai

Published: 1:05pm, 30 Jan 2024

Why you can trust SCMP

BYD, the world’s largest electric car maker, said it expects its earnings for 2023 to jump by as much as 86.5 per cent, buoyed by record deliveries. Its profitability, however, remains far behind rival Tesla because of the American giant’s bigger profit margins.

The Shenzhen-based company said in a filing to the Hong Kong and Shenzhen stock exchanges on Monday evening that its net profit for last year would come in at between 29 billion yuan (US$4.1 billion) and 31 billion yuan, a jump of 74.5 per cent to 86.5 per cent from 2022. It did not disclose estimated revenue.

Tesla last week posted net income of US$15 billion for 2023, up 19.4 per cent on the year.

BYD, backed by Warren Buffett’s Berkshire Hathaway, handed 3.02 million pure electric and plug-in hybrid vehicles to customers at home and abroad in 2023, up 62.3 per cent from the previous year. Most of its cars were sold in mainland China, with 242,765 units, or 8 per cent of its total deliveries, exported to overseas markets.

Tesla delivered 1.82 million cars worldwide, up 37 per cent year on year.

01:11

China’s BYD overtakes Tesla as world’s largest EV maker

SDIC Securities said in a research note on Tuesday that BYD’s profit margin per vehicle dropped to about 9,100 yuan, down 1,400 yuan from a year earlier because of the discounts it offered to buyers to sustain growth momentum in sales.

BYD lowered the prices of cars in its Dynasty and Ocean series by 5,000 to 10,000 yuan in the last two months of 2023.

“The company spent heavily on sales and marketing in the fourth quarter, [for example] distributing cash rewards of 666 yuan per vehicle to those stores that achieved sales targets,” SDIC said in the note. “The reward policy also affected BYD’s profit margin.”

BYD has historically been better known for electric vehicles (EVs) priced under 200,000 yuan, about 30 per cent cheaper than premium models from Tesla.

Its blade lithium iron phosphate battery packs have proved popular with Chinese drivers and car assemblers. The battery cells are arranged in a manner that increases energy density while enhancing resistance to overheating.

But the company announced early in January that it will invest 100 billion yuan in developing smart cars, an apparent effort to challenge Tesla and a clutch of Chinese rivals such as Nio and Xpeng in the premium EV segment.

In April, BYD unveiled its super luxury model, the Yangwang U8, priced at 1.1 million yuan, in a move to display its heft in car design and manufacturing.

The U8’s appearance evoked comparisons with the Range Rover among market experts. It can accelerate to 100km/h from a standstill in 3.6 seconds, and its four wheel-side motors allow the vehicle to make so-called “tank turns” and even “crab-walk” sideways.

Under the “Made in China 2025” industrial strategy, Beijing wants the country’s two top EV makers to generate 10 per cent of their sales overseas by 2025. Though authorities have not named the two companies, analysts believe BYD is one of them because of its large production and sales volumes.

Post