Dual Headwinds Confront BYD Ahead of Earnings Release

BYD's 2025 results face pressure from weak Q4 sales and a 2026 slowdown, while its 'God's Eye' driver-assist system draws user complaints. Strong exports offer a counterbalance.

BYD is set to announce its full-year results tomorrow, facing a confluence of challenges that threatens to overshadow the report. Investor scrutiny is intensifying due to emerging technical concerns with its driver-assistance technology and preliminary data signaling a difficult final quarter.

Anticipated Weakness in Financial Performance

The company's operating environment has deteriorated. For the third quarter of 2025, revenue contracted by 3.05% year-over-year to RMB 194.98 billion, while net profit saw a far steeper decline of 32.6%, falling to RMB 7.82 billion. Market experts project this trend continued into the fourth quarter, forecasting an approximate 11% drop in revenue alongside lower earnings per share.

A sluggish start to 2026 compounds these issues. Combined vehicle delivery figures for January and February came in roughly 36% below the level seen a year earlier. Analysts point to the reinstatement of a 5% purchase tax on electric vehicles in late 2025 as a key factor, which pulled forward significant demand as buyers rushed to avoid the levy, subsequently depleting early-year sales. This temporary weakness allowed rival Geely to seize the top spot in the Chinese automotive market.

Mounting Scrutiny Over "God's Eye" System

Simultaneously, BYD's advanced driver-assistance system, God's Eye, is under the spotlight following user reports of malfunctions. This week, several accounts described incidents involving unintended acceleration, abrupt steering maneuvers, and navigation errors.

One high-profile case involved a Chinese entrepreneur. After paying the equivalent of approximately $160,000 for a Yangwang U8, he reported the vehicle suddenly accelerating to 93 km/h on a country road with a 60 km/h limit, subsequently veering onto a median strip. In a separate event, another car allegedly changed lanes without driver input, moving into oncoming traffic.

The scale of these potential issues is amplified by the system's widespread deployment. Unlike competitors that offer similar technology as a premium add-on, BYD has made God's Eye standard equipment across a broad model range. By the end of 2025, over 2.5 million vehicles in China were equipped with the system—more than double Tesla's reported global Full Self-Driving user base of 1.1 million. This vast rollout increases the visibility of any software-related problems.

Export Segment Provides a Counterbalance

On a positive note, BYD's international business continues to show robust growth. The automaker achieved a monthly export record in February 2026, shipping 100,600 vehicles overseas. This builds on a milestone crossed in 2025, when the company's annual exports surpassed one million units for the first time. Management is targeting 1.3 million vehicle exports for 2026, which would represent a 24% increase over the previous year.

The company has indicated that software updates for the God's Eye system are scheduled for release in the coming months. Whether these measures will be sufficient to restore full confidence in the technology remains an open question. Investors will be looking for answers tomorrow when the complete annual figures are published, offering a clearer assessment of BYD's position in China's fiercely competitive electric vehicle price war.