BYD’s 55% Profit Plunge: Can a 950-km SUV and Record Exports Save the Day?

BYD's first-quarter net profit hits six-year low despite record overseas shipments and 60,000 pre-orders for its new Great Tang SUV, as price wars, PHEV tax changes, and currency losses squeeze margins.

China’s electric vehicle juggernaut BYD is navigating one of its most turbulent periods in years, with first-quarter earnings slumping to a six-year low even as a new flagship SUV racks up 60,000 pre-orders and overseas shipments hit fresh records. The contradictions are piling up, and investors are struggling to gauge which direction the stock will break.

Net profit for the first three months of 2026 tumbled 55.4% year-on-year to 4.09 billion yuan, marking the fourth consecutive quarterly decline. Revenue came in at 150.23 billion yuan, comfortably ahead of the market consensus of around 132 billion yuan, but that headline beat masked deep structural pressures. The bottom line missed analyst estimates by roughly 10%, and BYD’s Hong Kong-listed shares shed 2.2% on the day of the release.

The profit collapse stems from a brutal price war that shows no sign of easing. Rivals Xiaomi and Geely have forced BYD into ever-deeper discounts, with March rebates hitting a two-year high. At the same time, Beijing’s decision to exclude short-range plug-in hybrids—those with less than 100 kilometres of electric range—from purchase-tax exemptions from 2026 has dealt a heavy blow to BYD’s domestic sales mix. Plug-in hybrids account for about 60% of the company’s total volume, and domestic PHEV deliveries crashed 62% to 135,000 units in the quarter.

Currency losses added another layer of pain. Finance costs more than tripled year-on-year to 2.1 billion yuan, driven almost entirely by foreign-exchange volatility. Citigroup estimates that BYD’s China operations slipped into an operating loss during the quarter, leaving the international business to shoulder the entire margin burden of the core auto segment.

A Price Hike in the Middle of a Price War

In a move that surprised many, BYD raised the price of its LiDAR-based “God’s Eye B” driver-assistance system from 9,900 yuan to 12,000 yuan, effective May 1. The company blamed soaring memory-chip costs: AI infrastructure projects and the proliferation of models like DeepSeek have diverted global DRAM and NAND supply toward data centres, pushing up automotive-grade memory prices by an estimated 90% in the first quarter.

The increase is a sharp reversal from February 2025, when BYD rolled out smart-driving updates across 21 models simultaneously, signalling that advanced driver assistance was becoming standard equipment. Even at the higher price, BYD’s system remains a fraction of Tesla’s Full Self-Driving package, which costs 64,000 yuan in China. More than 2.85 million BYD vehicles are already equipped with “God’s Eye,” generating over 180 million kilometres of driving data daily.

The Great Tang Bet

On the product front, BYD launched pre-orders for its new flagship SUV, the Great Tang, at the Beijing Auto Show on April 24. Priced between 250,000 and 320,000 yuan, the vehicle has attracted roughly 60,000 orders within 48 hours, according to Chinese media reports. The SUV features BYD’s second-generation Blade battery and a 1,000-volt architecture, with the rear-wheel-drive variant claiming a range of up to 950 kilometres under China’s CLTC standard. Deliveries are scheduled to begin in June 2026.

Premium models like the Great Tang could help shore up margins, but analysts caution that sustained sales momentum is needed for such launches to truly offset the domestic weakness. The company’s market share in China’s EV segment slipped to 26% in March, down seven percentage points from a year earlier, while domestic sales plunged 30% in the first quarter.

Exports: The Bright Spot That’s Still Too Small

BYD’s international business is growing at breakneck speed, but it has yet to fully compensate for the domestic downturn. In April, the company exported 134,542 vehicles, a 70.9% surge that pushed the export share of total volume to 42.8%. Over the first four months of the year, cumulative overseas sales reached nearly 456,000 units, up almost 60% year-on-year. The full-year target stands at 1.5 million units.

European registrations doubled to around 29,000 units in the first two months of the year, and BYD’s UK market share hit roughly 4% in March. However, the European expansion faces headwinds: the company was the first Chinese automaker to be raised in the European Parliament over allegations of labour-rights violations at its factory construction site in Szeged, Hungary. That plant, a direct response to the EU’s 17% additional tariff on Chinese BYD imports, is expected to start production in the second quarter with an annual capacity of 300,000 vehicles. Total investment in the facility is up to €4 billion.

Analysts project annual revenue growth of 12% and profit growth of 23% through 2028, driven by expansion in Southeast Asia, Europe, and Latin America, as well as new AI features for mid-range vehicles. But with domestic sales falling for eight consecutive months—April’s total of 314,100 passenger vehicles was down 15.7% year-on-year—the question is whether export growth can scale quickly enough to turn the tide. The answer will become clearer when BYD reports its half-year results.