BYD Posts Worse-Than-Expected Profit Drop Amid EV Price War

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(Bloomberg) — BYD Co. reported a steeper-than-expected slump in fourth-quarter profit as relentless competition and tighter regulation in China ramped up pressure on the world’s biggest electric vehicle maker to reignite stalling momentum. 

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Net income in the three months ended Dec. 31 was 9.3 billion yuan ($1.3 billion), according to figures derived from annual numbers reported Friday. That’s down 38% from a year earlier and missed the average analyst estimate for 10.5 billion yuan. 

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Revenue fell about 14% to 237.7 billion yuan, underscoring concerns that BYD’s aggressive discounting and diversified product strategy, which saw it topple Tesla Inc. as the world’s top-selling EV maker last year, is taking its toll.

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BYD’s ascent to global dominance is facing a reality check as it struggles with slowing sales at home, forcing the industry bellwether to spend heavily to keep up with tech-centric models being rolled out by the likes of newcomer Xiaomi Corp. Sales have slumped in the first two months of this year and, after dominating the Chinese market for years, BYD has now ceded the top spot to Geely Automobile Holdings Ltd. 

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That’s pushed BYD to increasingly look abroad, where demand for its models is booming and the carmaker generates more profit for each vehicle it sells. 

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Exports have held up so far in 2026, in contrast to the slump in domestic sales, and BYD is looking to sell 1.3 million cars outside China in 2026. Still, it’s an expensive and high-stakes endeavor for the EV brand, which is pouring money into building factories overseas to circumvent tariffs and other trade barriers. 

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Its gross margin, one of the company’s most closely watched metrics, fell to a three-year low of 17.7% in 2025, down from 19.4% a year earlier.

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Besides increased competition, some of BYD’s woes have been self inflicted.

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Some Chinese customers have taken to social media with complaints about God’s Eye, the highly touted sophisticated system that’s designed to spot dangers on the road and practically let the car drive itself.

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Amid great fanfare, BYD last year announced God’s Eye would not only go into its premium vehicles, but become a standard feature across its lineup — even for cheap hatchbacks. The move was designed to cement BYD’s dominance in the world’s largest auto market by offering advanced tech that its rivals charge a premium for but at no extra cost. 

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But the issues the company has faced surrounding God’s Eye have illustrated the limits of some of BYD’s technology and illustrates a potential downside to adding advanced systems to cars before all their kinks are worked out. 

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Amid criticism for lagging behind software-centric rivals like Huawei Technologies Co. and Xiaomi Corp., BYD is showing signs of betting more pragmatically on offering solutions to driving range concerns, rather than flashy smart driving features.