BYD Shares Fall 8% After Q2 Profit Decline

Shares of Chinese electric vehicle maker BYD Co. fell 8% to their lowest since February after second-quarter profit missed estimates due to a mix of dealer rebates, an increase in costs, and aggressive price cuts.

The company, which last year beat Elon Musk-led Tesla Inc. to become the world's top EV seller, reported a staggering 30% plunge in quarterly profit, its first decline in over three years, as per a Bloomberg News report.

Despite robust overseas sales, BYD’s net profit of 6.36 billion yuan or $892 million in the April-June period fell short of analysts’ estimates for a modest increase.

Heavy discounting saw BYD’s gross margin contract to 18% from 18.8% in the first half of 2024. The Shenzhen-based giant blamed “industry malpractices” and “excessive marketing” for pressuring its bottom line.

BYD’s subdued performance comes as a shock, given global expansion has gained pace this year. The Chinese EV major has been making significant inroads in markets like Brazil, which accounts for about one-third of its international sales, Australia, Singapore, and parts of Europe.

Morgan Stanley estimates its per-vehicle profit likely fell to the lowest quarterly level since the first quarter of 2022.

Still, JPMorgan and Citigroup analysts expect BYD’s per unit profitability to improve in the second half, thanks to narrowing pricing discounts, the Bloomberg report said.