BYD Stock Price (HKG:81211) Drops With Profits, Remains An Outperformer YTD

BYD's stock price (HKG: 81211) experienced a downturn today following the release of the Chinese electric vehicle (EV) giant's latest quarterly earnings, which revealed a significant drop in profits.

The decline is attributed to the intensifying price war within China's competitive EV market, overshadowing otherwise strong revenue growth and global expansion efforts.

The BYD share closed down 3.82% in Hong Kong trading today, reflecting market concerns over BYD's profitability. This drop follows the company's report of a net profit of 6.36 billion yuan ($891 million) for the April-June quarter, a roughly 30% decrease compared to the same period last year.

Despite this recent dip, the stock remains up 21.39% since the start of 2025, showcasing the overall positive trajectory of the company this year.

Despite the challenges in its domestic market, BYD continues to make substantial progress in its global expansion.

Overseas sales of battery-powered vehicles and plug-in hybrids more than doubled in the first seven months of the year, reaching 550,000 units. In Europe, BYD outsold Tesla for the first time in May 2025, registering 7,231 new battery-electric vehicles, a 169% year-on-year increase.

The company is also expanding its production capacity with new facilities in Hungary and Turkey, aimed at meeting the rising international demand.

Revenue Growth Amidst Margin Squeeze

Looking to the latest results, and BYD's revenue for the quarter grew by 14% year-over-year, reaching approximately 201 billion yuan, driven by increased overseas sales. However, this revenue growth was not enough to offset the impact of aggressive price cuts implemented to maintain market share in China.

The company acknowledged that “increased price competition and frequent occurrences of excessive marketing” have negatively affected the industry. Retail car prices in China have fallen by around 19% over the past two years, settling at approximately 165,000 yuan ($22,900), further compressing profit margins.

The price war has significantly impacted BYD's gross profit margin, which contracted to 16.3% in the second quarter, down from 18.7% a year earlier. BYD has been at the forefront of these price reductions, initiating multiple rounds of cuts since 2023, including the most recent in May 2025. 

Analysts are closely watching BYD's strategic response to the ongoing price war and its impact on profitability. Citi analysts pointed out that BYD's net profit fell short of consensus estimates, attributing the miss to price cuts and a special incentive paid to dealers that did not yield the desired sales boost.

Despite these headwinds, BYD aims to achieve global sales of 5.5 million vehicles in 2025, having already sold 2.49 million cars by the end of July.

The current market reaction underscores the delicate balance BYD must strike between maintaining market share through competitive pricing and preserving profitability. As the EV landscape continues to evolve, BYD's ability to navigate these challenges will be crucial in determining what happens from here.