Chinese electric vehicle giant BYD expects its net profits for third quarter 2023 to nearly double, thanks to a recent surge in electric vehicle sales. The Berkshire Hathaway-backed company is Tesla’s top competitor in China and outpaced the American EV maker by nearly 200,000 units in sales.
Forecasts from BYD show that the company predicts to record a net profit of $1.31 to $1.57 billion for the July to September period, representing a 67% to 102% increase from last year. The company noted that despite seeing increasingly stiff competition in the auto segment in the third quarter of the year, BYD made record profits.
According to BYD, the company maximized its revenue by improving brand influence in major markets, taking advantage of economies of scale and leveraging cost-control policies across the supply chain. This should result in a 120% to 142% rise in year-over-year net profit from $2.8 to $3.07 billion from January to September 2023 compared to $1.27 billion over the same period in 2022.
Competition in the Chinese electric vehicle market has become incredibly intense in recent years as a multitude of automakers have worked to challenge Tesla’s dominance. Armed with billions of dollars in government subsidies, Chinese EV makers have flooded the local and foreign markets with so many affordable electric cars that European authorities have launched a probe into China’s EV subsidies.
BYD notes that it saw record-high sales of new energy vehicles (NEVs) in Q3 2023 and now ranked first in NEV sales globally. Data from the company’s shows its new energy vehicle sales more than doubled from 2022 to 2023, increasing by 53% to 824,000 NEV units. The company’s shares jumped after it reported to shareholders it expected higher Q3 profits, surging by close to 7% on the Hang Seng index and 4.3% on the Shenzhen Stock Exchange.
While general automobile sales have been declining in China, with the China Passenger Car Association (CPCA) recording a 2.6% drop in car sales from July 2022 to July 2023, electric vehicle sales have soared. Tesla and BYD have led a price discount war that has seen both automakers cut vehicle prices to make them more affordable and increase adoption.
BYD has emerged as Tesla’s top competitor, thanks to strong domestic sales and exports of both battery electric vehicles (BEVs) and plug-in hybrids. The Shenzhen-based company now ranks as number two globally in terms of electric vehicle sales behind Tesla.
With entities such as VinFast Auto Ltd. (NASDAQ: VFS) from Vietnam also vying for dominance on the international market, the EV space is set for even stiffer competition that could see some players falling to the wayside.
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