BYD profit plunges 43.5 per cent as China’s car-market price war breaks three-quarter winning streak
Tesla's price cutting marketing strategy is killing other EV companies who has lower or negative profit margin.
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The carmaker reported that net profit fell to 4.13 billion yuan (US$596.28 million) in the first quarter, down from 7.3 billion yuan in the fourth quarter
BYD suffered along with other carmakers as potential buyers held off in anticipation of bigger price cuts, an analyst says.
Quote:
The carmaker reported that net profit fell to 4.13 billion yuan (US$596.28 million) in the first quarter, down from 7.3 billion yuan in the fourth quarter
BYD suffered along with other carmakers as potential buyers held off in anticipation of bigger price cuts, an analyst says.
BYD, the world’s largest electric vehicle (EV) maker, got off to a bumpy start in 2023 as its net profit in the first three months declined 43.5 per cent on a quarterly basis amid a simmering price war in China’s automotive industry.
... net profit between January and March fell to 4.13 billion yuan (US$596.28 million) from an all-time high of 7.3 billion yuan in the fourth quarter of 2022.
Revenue declined 23.1 per cent to 120.2 billion yuan quarter on quarter.
BYD's gross margin was 17.86 percent in the first quarter, up 5.46 percentage points from the same period last year, although it was 1.14 percentage points lower than the fourth quarter.
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I reflected trading experiences by writing journals. My comments are for educational purposes not financial advice.
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MooMamaLlama : He's trying Bezos strategy... taking a temporary loss while capturing a bigger portion of the market...for mass profit in the long run.
Only big money can afford to do that, especially longer term, so it's effectively paying for the privilege of cutting competitors out of the market over time. Let's see how it plays out long term... he has to fund SpaceX as well
ZnWC OP MooMamaLlama : Thanks for your view
MooMamaLlama : I'd like to see BYD thrive, along with multiple other EV companies. Without competition, Tesla will have such a monopoly on the entire sector. Genarally speaking, competition keeps overall standards higher and prices lower. Better for consumers regardless of what cars they buy.
bullrider_21 MooMamaLlama : BYD Stock Up After Earnings. Tesla's Price War Is Hurting It More Than Its Peers.
Thanks for pointing out that Tesla's price war is hurting Tesla more than its peers.
bullrider_21 : Tesla's free cash flow almost completely dried up during its price-cutting campaign in the first quarter. Wall Street had expected around $3.2 billion in free cash flow (FCF). Tesla delivered $441 million in FCF, and that was with the help of $521 million in regulatory emission credits, which flow straight to FCF.
ZnWC OP bullrider_21 : Thanks for sharing
ZnWC OP MooMamaLlama : I agree that competition is good. BYD NEV is the largest in term of gobal sales (Tesla is 2nd). I just want to highlight that largest sales may not result in positive profit and revenue during this price war.
MooMamaLlama ZnWC OP : Definitely, Icouldn't agree with you more