A Chinese electric vehicle maker backed by billionaire Warren Buffet’s diversified holding group Berkshire Hathaway has revealed that it has more than tripled its annual profits. BYD said last week that profits from the first half of the year totaled 10.5 billion yuan to 11.7 billion yuan ($1.4 billion- $1.6 billion). This represents a year-over-year profit increase of 192% to 225%, the EV maker said.
BYD has been the top-selling electric vehicle manufacturer in China, outselling even Tesla in its local market and threatening to challenge the American carmaker in international markets. The Berkshire Hathaway-backed EV maker sold more than 900,000 battery electric vehicles in China and 1.85 million worldwide in 2022 alone.
Even though the auto industry and global markets, in general, were negatively affected by the coronavirus pandemic and the ongoing Russia-Ukraine war, BYD has managed to weather market factors and maintain production of both battery electric vehicles and plug-in electric cars. A statement from the company says that BYD was able to maintain profitability over the past few years of economic upheaval by expanding and leveraging scale advantages, using cheaper raw materials and optimizing costs across every step of the supply chain. These approaches allowed BYD to double its new energy vehicle sales from 134,036 in June 2022 to 253,046 last month.
Most of these sales occurred in China, BYD’s home market, and the largest EV market in the world. The EV maker also enjoyed decent international sales as its shipments increased by nearly two times to 1.2 million units in the first half of 2022. This was mainly due to the end of pandemic-related lockdowns in Shanghai, which had disrupted manufacturing coupled with Chinese economic recovery.
BYD has maintained its position at the top of China’s electric vehicle market and challenged Tesla despite competition from local firms, including SAIC-GM-Wuling, Guangzhou Automobile Group Co (GAC), NIO and Li Auto, which also saw a significant year-over-year increase in sales (150%). Although increasing price competition has also caused BYD’s Hong Kong-traded shares to drop by 6% more than the past year, the company has a capitalization of close to $100 billion, more than giant American automakers Ford and General Motors.
Unlike Chinese EV makers, which generally focus on new energy vehicles, BYD has a more diversified lineup of products that includes photovoltaics and handset components, which BYD sells to Huawei, Dell, Xiaomi and Apple, among others.
Companies such as BYD are a shining example that other startups, including Nikola Corporation (NASDAQ: NKLA), can also break into and dominate key markets around the world if they remain focused on addressing the specific needs of customers.
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