The price war on the Chinese electric car market is leaving deep marks on the company’s balance sheet BYD. The company only increased its sales by four percent in the first quarter to the equivalent of 16 billion euros, as BYD announced on Monday. This is the lowest growth in almost four years. In terms of profits, the increase was 10.6 percent to 590 million euros, the lowest it has been since 2022. But BYD is doing better than that Tesla: The US electric car manufacturer recently reported its first decline in sales since the 2020 pandemic.
BYD took the crown as the largest electric car manufacturer from Tesla last year, but gave up market leadership again in the first quarter. A price war has been raging on the Chinese electric car market for over a year. BYD is trying to conquer higher price segments with new models that promise better returns. At the same time, the company has cut its prices by five to 20 percent since February alone. The experts from Goldman Sachs assume that profits in the electric car business will decline this year. The industry as a whole could even make losses if there are further price reductions.
For the full year 2023, BYD’s profit of 30.04 billion yuan was still 81 percent above the previous year’s level. Sales for the year as a whole were 602.3 billion yuan – 42 percent higher than the previous year.
BYD successfully attacks VW, Mercedes, BMW and Co.
As early as 2022, BYD displaced the leading brand for decades Volkswagen from first place in China. The manufacturer from Shenzhen is now working its way up from the mass market to the premium and luxury segment. German car manufacturers have this market, which is still dominated by combustion cars BMW, Mercedes Benz, Audi and Porsche so far firmly under control. But here too, the top dogs could come under pressure from Chinese competition with the switch to electric cars.
Gasoline croissant VW – every fifth new combustion engine in China last year was a Volkswagen – only has a market share of just 2 to 3 percent in the electric world. At its best, Volkswagen raked in a profit of around 5 billion euros in China. For 2024, the group only expects 1.5 to 2 billion euros. How Volkswagen wants to turn the situation around is clear The manager magazine recently described it in detail.