BYD's Two-Track Strategy: Export Momentum and a Robot Bet Amid a Slumping Home Market

BYD's Q2 profit rose 30% on record exports, but H1 revenue fell 7.13%. It unveiled a humanoid robot, joining Tesla and Xpeng in embodied AI.

The Chinese electric-vehicle giant is fighting its domestic battles on two fronts. On one side, an aggressive export push that has pushed overseas sales to record levels; on the other, a strategic pivot into humanoid robotics that signals where the company sees its next growth horizon.

BYD unveiled a humanoid robot named "Xiao Di," joining a growing cohort of Chinese automakers chasing what the industry calls "embodied AI." The move follows Tesla's Optimus playbook, and it comes as capital floods into the sector — Xpeng's robotics arm recently raised more than $900 million at a valuation exceeding $6.3 billion, the largest private funding round in China's embodied-AI industry. Backers included IDG Capital, Gaorong, Tencent and Alibaba, with Xpeng founder He Xiaopeng personally contributing around $100 million. Chery affiliate AiMOGA is also preparing an IPO.

The robotics foray arrived alongside second-quarter results that showed the first profit growth in over a year. Net income climbed 30 percent year-on-year to 8.2 billion yuan, even as revenue slipped 3.2 percent to 194.6 billion yuan. Reuters attributed the rebound primarily to a strong export surge that offset weak domestic demand, though the figures still came in below analyst expectations.

The first half tells a more sobering story. Revenue fell 7.13 percent to 344.6 billion yuan, while net profit dropped 20.54 percent to 12.32 billion yuan. New-energy vehicle sales declined 15.72 percent to 1.808 million units. Yet the export channel kept pushing against the tide: overseas deliveries grew 67.8 percent to roughly 792,000 vehicles, now accounting for about 44 percent of total sales. The premium brands Denza, Fangchengbao and Yangwang also delivered, with sales up 61 percent to 228,000 units.

The export mix is visibly reshaping profitability. Gross margin for the first half rose to 18.85 percent from 18.01 percent a year earlier, while operating cash flow expanded 17.3 percent to 37.34 billion yuan — evidence that higher-value international sales are improving the cost structure even as overall revenue contracts.

July showed the recovery accelerating. Sales jumped 21.76 percent to 419,211 units, with overseas passenger car and pickup deliveries hitting a record 179,841 vehicles. Second-quarter volume of 1,108,048 vehicles was down 3.24 percent year-on-year but marked a clear improvement over the first quarter.

Management has set an export target of 1.5 million vehicles for 2026, a goal underpinned by new production capacity in Hungary and Turkey. CEO Wang Chuanfu had earlier warned of a "knockout phase" in China's brutally competitive market, and the numbers bear that out — the home front remains under pressure while international markets increasingly drive growth.

The stock market has yet to reward the operational turnaround. Shares closed Friday at 9.92 euros, down 0.4 percent, and sit 24 percent below the 52-week high of 12.99 euros reached in late August last year. The stock is off 4.2 percent over 30 days and down 7.3 percent year-to-date; over twelve months, the loss stands at 21 percent.

Investors remain wary of the margin-rich export story while the domestic market continues to struggle. Whether "Xiao Di" ever becomes a meaningful revenue contributor is an open question — Tesla and Xpeng's comparable projects are still in early stages. For now, the market's focus stays fixed on whether BYD can hit that 1.5-million-vehicle export target, which would mark the clearest signal that the overseas engine can outrun the drag from home.