South Korean Media: What's Happening with BYD, Surpassing Tesla?… Price Wars and Overseas Expansion Have Caused Simultaneous Declines in Profitability and Market Share

¬ Market share has dropped to around 7%, net profit down for the first time in four years… "Turning Point from Price Competition to Technology Competition"

Last year, China's BYD surpassed the U.S. Tesla to become the "world's largest electric vehicle seller," yet its profitability and market share have significantly weakened. Despite achieving record-high sales and volume, net profit decreased by 19% compared to the previous year—the first decline in four years. This year, its market share in China has also fallen into single digits.

Analysts believe that the strategy of lowering prices to boost sales has led to a sharp drop in profits, resulting in a situation where high sales volumes do not translate into profits. Others argue this reflects excessive early-stage investments made by BYD after losing its dominant position in the domestic market, as it aggressively expands into overseas markets.

BYD Surpassed by Geely in China

On the 31st, data from South Korea’s Automotive Research Institute showed that BYD’s market share in China during January–February this year was 7.1% (191,000 units), down from 7.7% in 2022, 11.5% in 2023, and a peak of 15.5% in 2024—then slightly declined to 14.4% last year before sharply dropping again, reaching only about half of its peak level. Up until last year, BYD had consistently outperformed Geely in quarterly sales, but this year it fell behind by nearly 100,000 units, losing its title as the top-selling brand.

Performance has also failed to meet expectations. BYD’s net profit last year amounted to 32.6 billion RMB (approximately 710 billion KRW), a 19% decrease year-on-year—lower than market forecasts (35.4 billion RMB). Sales volume reached 2.26 million units, surpassing Tesla’s 1.64 million, while revenue increased to 803.9 billion RMB, continuing growth. However, the revenue growth rate was just 3.5%, the lowest in six years. Employee numbers also decreased by 10% within a year, intensifying restructuring pressures.

This downturn is rooted in the “extreme price competition” in China’s EV market. Domestic automakers have recently been engaged in relentless price-cutting battles—so-called “involuntary competition” (self-annihilation). BYD introduced low-priced models averaging around 26 million KRW (about 1.2 million RMB), aiming to expand sales volume, but experts say it failed to maintain profitability. Bloomberg reported on the 28th: “BYD surpassed Tesla in sales through discount-driven competition—but paid a heavy price for it.”

Among key factors, “changes in Chinese policy” have played a direct role. Starting this year, government policies toward the automotive industry have shifted from “quantity growth” to “quality improvement,” placing heavier burdens on companies like BYD that focus on low-cost EVs. Previously advisory “electric vehicle energy efficiency standards” are now being enforced compulsorily—if vehicles fail to meet these standards, they cannot be produced or sold. Especially stringent requirements for light-duty vehicles pose a disadvantage for BYD, which relies heavily on popular, affordable models.

Changes in subsidy systems have also had an impact. China is vigorously promoting its “trade-in” policy, encouraging consumers to replace old products, which has become a tool to phase out low-end models and drive industrial upgrading in the auto sector. Subsidy benefits for low-priced models have been reduced. Previously, plug-in hybrid vehicles (PHEVs) could qualify for subsidies based solely on an electric range of 43 km, but now require a minimum range of over 100 km. As a result, several existing low-cost models from BYD, such as the Seagull, have been excluded from subsidy eligibility.

From “Price” to “Technology”

Some view the Chinese domestic market as entering a turning point—from “price competition” to “technology competition.” It has been pointed out that excessive investment in research and development (R&D) has worsened BYD’s profitability. Last year alone, BYD increased its R&D spending by 17% compared to the prior year, reaching 63.4 billion RMB (about 1.16 trillion KRW)—a figure twice its annual net profit.

Last year, the company launched the “Super e Platform,” enabling a 400-km range with just a 5-minute charge. In January this year, it announced plans to invest 100 billion RMB (about 2.2 trillion KRW) in advancing autonomous driving technology, shocking the industry. However, given how quickly domestic rivals like NIO, Xpeng, and Li Auto are catching up in smart features and autonomous driving capabilities, some argue that aggressive technological development alone may not create a significant gap in the short term.

Overseas expansion strategies are also seen as a burden. To boost exports to emerging markets like Latin America and Southeast Asia, BYD has directly ordered and operated large-scale car carrier fleets. At the same time, it has established local production facilities in Hungary, Brazil, and Thailand, leading to substantial increases in logistics and construction costs.

Nevertheless, BYD is expected to continue expanding abroad without slowing down. The rationale lies in the fact that domestic demand growth is decelerating, pushing BYD to pursue external expansion centered on emerging markets. Some believe BYD might attempt to restructure through acquisitions, mergers, and brand revitalization. According to South Korea’s Automotive Research Institute: “Due to regulatory changes and intensified domestic competition, small and low-price segments are shrinking. Companies will increasingly focus overseas expansion on emerging markets. To shed its low-price image, repositioning brands and exploring acquisition opportunities will likely increase.”

Source: Chosun Ilbo

Original article: toutiao.com/article/1861144688465028/

Disclaimer: The views expressed in this article are those of the author(s) and do not necessarily reflect the official stance of the publisher.