On August 17, 2023, the BYD ATTO 3 is displayed at the British Motor Show held at the Farnborough International Exhibition Center in the United Kingdom.
John Keble | Getty Images News | Getty Images
Shares in China-listed Chinese automaker BYD rose more than 5 percent on Tuesday, a day after a jump in first-half profit.
Thanks to record deliveries, the Chinese electric car maker reported on Monday that its first-half net profit rose 204.68 percent, or 10.95 billion yuan ($1.5 billion) for the January-June period, compared with a year earlier. Net profit was RMB 3.59 billion a year ago.
The Hong Kong-listed shares of the automaker rose 5.6 percent on Tuesday, while shares in Shenzhen gained 4.75 percent.
The strong performance was mainly due to the rapid growth of the new energy vehicle business, the company said in a report. stock filing.
Compared with the first half of 2022, the stock filing shows that the revenue in the first six months has increased by 72.72%.
“If you look at BYD’s data, obviously revenue growth is very strong, but we are more impressed by its profit margin. BYD’s gross margin in the first half of the year was 18%. That’s Tesla’s gross margin,” Shao Jiong said. Barclays China technical analyst.
China’s best-selling car brand posted its best-ever quarterly sales. In the second quarter, the sales volume of new energy vehicles for passenger vehicles was 700,244 units, Year-on-year growth of about 98%According to the company.
In contrast, U.S. competitors tesla Reports global vehicle deliveries of 466,140 in the second quarter.
China is the largest auto market Ranked first in the world by sales volume and output. It is also the largest electric vehicle market in the world and a key driver of EV development.
“BYD is targeting the mass market that Tesla can’t reach,” Vivek Vaidya, associate partner at Frost & Sullivan, told CNBC’s “Street Signs Asia” on Tuesday.
“You’re going to see Chinese-made cars at a significant price advantage over Tesla, with similar features and stunning looks,” Vaidya said.
price war
BYD faces pressure from domestic rivals as well as price competition among Tesla.
Elon Musk’s electric car maker The company slashed prices on the Model S and Model X in August as the company looked to gain market share amid growing competition in China. In the same month, Tesla also lowered the price of Model Y and Model 3.
Earlier this year, BYD and its domestic rivals NIO, Xpeng Also reduced the price.
“Squeezing out weaker players at lower prices is really a good thing for the health of the industry,” Barclays’ Shao told CNBC’s “Squawk Box Asia” on Tuesday.
“BYD’s operating margin is 5%, which is a pretty healthy operating margin, and many players in China’s EV market even have negative gross margins, let alone operating margins,” Shao said.
The price cuts come as consumers remain wary of spending amid a weaker-than-expected economic recovery in China after strict coronavirus restrictions were lifted.
Frost & Sullivan’s Vaidya said the brands are cutting prices to get as much as possible to market.
“Electric vehicles are slightly different from internal combustion engine vehicles. Electric vehicles can also make money for OEMs who sell electric vehicles,” Vaidya said, referring to OEMs such as Tesla.
“For example, when they run, Tesla has charging points, so for every mile that Tesla runs, Tesla gets some money. So the discounts or price wars that are going on are to get the product to the market, ’ said Vidya.
“After that, it starts making money.”
competitive landscape
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