BYD’s Profit Plunge Prompts a Pricing Pivot as Exports Mask Home Market Pain

BYD's Q1 net profit crashed 55% amid China's price war, prompting a strategic pivot: raising prices on driver-assist tech, launching the premium Great Tang SUV, and relying on surging exports for margin relief.

The numbers from BYD’s first-quarter report were never going to be pretty, but the scale of the damage has forced a strategic recalibration. Net profit collapsed 55 percent to 4.08 billion yuan — the steepest earnings decline in six years — as China’s relentless price war chewed through margins. Revenue slid 12 percent to 150.2 billion yuan, with the company delivering just over 700,000 vehicles in the period.

The culprit is a familiar one: a brutal discounting battle that has now run for two years, reaching fresh extremes in March. But there’s an added twist this time. Beijing’s decision to scale back tax breaks for electric vehicles pulled demand forward into the fourth quarter of 2025, leaving a gaping hole in first-quarter sales. The result is the fourth consecutive quarter of falling profits — a streak that has forced management to tear up the playbook.

God’s Eye Gets a Price Tag

In a clear departure from the aggressive discounting that defined BYD’s recent strategy, the company is now raising prices. From May, the LiDAR-based “God’s Eye B” driver-assistance system will cost 12,000 yuan — a 21 percent jump from the previous 9,900 yuan. The move, which BYD attributes to surging global procurement costs for storage hardware, marks the first time the company has passed higher input costs directly to customers.

The system already equips more than 2.8 million vehicles on Chinese roads, meaning the price hike will ripple across a significant portion of the fleet. It’s a calculated gamble: raise prices to protect margins, but risk alienating the cost-conscious buyers who have fuelled BYD’s domestic dominance.

The Great Tang Arrives

On the product front, BYD used the Beijing Auto Show on April 24 to open pre-orders for the Great Tang, a three-row SUV aimed squarely at the premium segment. The response was electric: more than 30,000 pre-orders landed within the first 24 hours. Priced between 250,000 and 320,000 yuan, the model boasts a claimed CLTC range of up to 950 kilometres and a 1,000-volt charging architecture — credentials designed to take on European rivals on their own turf.

The Great Tang is more than just a new model; it’s a test of whether BYD can push up the value chain without sacrificing volume. Analysts are watching closely, with Citigroup warning that the domestic business may already be operating at a loss in the first quarter.

Exports: The Margin Lifeline

If the home market is bleeding, the export business is providing the transfusion. Overseas deliveries surged more than 50 percent year-on-year to over 321,000 units in the first quarter, accounting for roughly 45 percent of total sales. That’s up from around a third a year ago, and the trajectory is accelerating.

BYD’s factory in Szeged, Hungary, began trial production in late January, with series production expected to start in the second quarter. The plant is central to the company’s strategy of sidestepping EU tariffs on Chinese EVs. Meanwhile, the company is investing heavily in charging infrastructure, with plans for 20,000 new fast-charging stations in China and another 6,000 overseas within the next 12 months.

The ambition is clear: BYD wants to sell 1.5 million vehicles outside China this year, and lift the export share of total sales to 50 percent by the end of the decade.

Market Reaction: Pain Priced In?

The Hong Kong-listed shares closed at 103.70 HKD on Tuesday, down 2.2 percent on the day. Yet the ADR is still up roughly 16 percent year-to-date — a sign that investors are looking past the margin squeeze and betting on the long-term growth story. Analyst price targets range from 127 to 137 Hong Kong dollars, with most maintaining buy recommendations.

The tension is palpable. BYD is simultaneously fighting a price war at home, investing billions in overseas capacity, and trying to push into premium segments where margins are fatter but competition is fiercer. The God’s Eye price hike suggests management believes the market can absorb higher costs — but the next few quarters will reveal whether that bet pays off, or whether the Great Tang’s 30,000 pre-orders are a fleeting bright spot in an otherwise darkening picture.