BYD's Q2 Profit Rebound Masks a Split Personality: Exports Soar While China Bleeds

BYD's H1 net profit fell 20.5% amid China price war, but Q2 profit rose 30% and overseas revenue now exceeds half of total.

The headline numbers from BYD's first-half results tell a sobering story, but the detail beneath them reveals a company in the middle of a profound geographic transformation. Net profit attributable to shareholders fell 20.5 percent year-on-year to 12.33 billion yuan, while revenue slipped 7.1 percent to 344.82 billion yuan — figures that sent the stock down 5.5 percent on Friday and another 3.3 percent on Monday to €9.60.

Strip out the first quarter, however, and the picture shifts dramatically. In the April-to-June period, net profit jumped 30 percent to 8.2 billion yuan, snapping a run of four consecutive quarterly declines. Revenue, though, unexpectedly contracted around 3 percent to 194.6 billion yuan — a miss that stung all the more given that analysts at Morgan Stanley, UBS, Citi, Deutsche Bank and CMBI had penciled in average profit growth of 48 percent.

A Price War at Home, a Margin Story Abroad

The profit squeeze traces back to Beijing's decision to scale back key vehicle-trade-in subsidies, which ignited a bruising price war across China's electric-vehicle market. BYD itself frames the environment as one of "weak domestic demand alongside robust export growth," while pointing to rising costs for raw materials, components and chips that are compressing margins industry-wide.

The counterweight is increasingly hard to ignore. Overseas revenue reached 181.27 billion yuan in the first half — more than 52 percent of total turnover — with exports jumping 67.8 percent to 792,000 vehicles. The secondary data confirms the trajectory: international sales climbed 34 percent and now represent 53 percent of the group total, even as Greater China revenues collapsed 31 percent. Cumulative overseas deliveries rose 71 percent to more than 790,000 units, carrying a gross margin of 22 percent — up 1.9 percentage points year-on-year.

That margin differential is the crux of the investment case. If export growth continues at anything like this pace, the higher profitability of overseas sales could progressively offset the margin erosion inflicted by the domestic price war.

Competitive Pushback From Japan

The very success of that strategy is now drawing a response. Reuters reported Friday that Nissan and Honda plan to jointly develop standardized electronic control units for software-defined vehicles starting in fiscal 2029 — an initiative explicitly framed as a counter to the competitive pressure Chinese manufacturers like BYD are exerting in Europe and Southeast Asia.

The timeline is distant, but the signal is immediate: competition in BYD's most important growth markets is set to intensify precisely as the company's overseas scale economies are still maturing. For now, the stock appears to have absorbed the news, trading near its 50-day moving average of €9.67 at €9.64, roughly 7.6 percent below its 200-day line.

Infrastructure, Product Pipeline and the Road Ahead

BYD is not standing still on either front. The company celebrated the completion of its 10,000th flash-charging station in China last Saturday at its Shenzhen Longhua flagship site, with a target of 20,000 stations by year-end 2026. On the product side, the new "Da Han" flagship sedan boasts five-minute fast-charging technology and a range of 1,008 kilometers on the CLTC cycle, priced below the equivalent of A$52,000. The company also passed the 100,000-vehicle milestone for new registrations in the UK, underscoring its foothold in established European markets.

The stock's trajectory hinges on two questions. Can BYD sustain high-double-digit overseas revenue growth while keeping export gross margins stable? And will the Greater China slump bottom out before the Nissan-Honda alliance — or further domestic price cuts — erode the overseas advantage? The stock sits 23 percent below its 52-week high from October 2, 2025, with the 52-week low at €8.03 as the bear-case reference point. Upcoming model launches, including the Tang SUV and additional Da Han variants slated for the fourth quarter of 2026, will offer the next concrete test of whether BYD can restore the balance between volume and margin.