- The traditional off-season at the start of the year, coupled with the phasing out of NEV support policies, dealt a dual blow.
- Despite strong growth in overseas sales, BYD's first-quarter revenue still declined by nearly 12%.
BYD saw a sharp decline in its first-quarter net profit, reflecting a severe impact on automakers' profitability as China's new energy vehicle (NEV) market entered its slow season at the beginning of the year.
The Chinese NEV giant's net profit attributable to shareholders came in at 4.09 billion yuan ($594 million) in the first quarter, plunging 55.38% from a year earlier, according to a financial report released Tuesday.
After deducting non-recurring gains and losses, the company's net profit was 4.15 billion yuan, down 49.24% year-on-year.
BYD's first-quarter revenue stood at 150.23 billion yuan, a decrease of 11.82% from the same period last year.
In the first quarter, BYD's NEV sales were 700,463 units, down 30.01% year-on-year and 47.82% lower than the fourth quarter.
The steep drop in profit highlights the broad pressure facing the entire industry. As the Chinese market entered its traditional slow season early in the year and support policies were scalled back, Chinese automakers fiercely competed for market share through price cuts and promotional campaigns.
A industry-wide slump had been anticipated. In September 2025, William Li, founder, chairman, and CEO of Nio, warned that as national stimulus policies were phased out, the entire Chinese EV industry would face significant growth pressures in the first quarter of 2026.
Li said at the time that with the reduction of tax incentives for vehicle purchases, it was inevitable that demand would be concentrated at the end of the previous year.
He predicted that from the perspective of industry demand, it would be considered a good outcome if first-quarter sales reached half of the fourth-quarter level.
In 2024 and 2025, China exempted NEVs from purchase tax, with a maximum tax reduction of 30,000 yuan per vehicle.
However, in 2026 and 2027, the purchase tax will be halved from the standard 10% rate, with a maximum tax reduction of 15,000 yuan per vehicle.
This policy shift caused a significant amount of demand to be brought forward to the fourth quarter of last year, exacerbating the slump in the first quarter.
A highly competitive market environment has squeezed automakers' profit margins. BYD mentioned in late March that the domestic price war was the main reason for the pressure on its 2025 profits.
Meanwhile, surging supply chain hardware costs have also brought additional financial challenges to the company.
Earlier today, BYD announced an increase in the optional upgrade fees for its advanced driver assistance systems on certain models.
Starting May 1, the option price for its God's Eye B smart driving system will be raised from 9,900 yuan to 12,000 yuan, reflecting a significant surge in global storage hardware costs.
Despite mounting headwinds in the domestic market, BYD's overseas business remains a notable bright spot for growth.
The company's overseas sales reached 321,165 units in the first quarter, up 55.84% year-on-year, contributing 45.85% of its total NEV sales during the same period, according to data compiled by CnEVPost.
The company's management has raised its full-year export target for 2026 to 1.5 million units, indicating that the international market will take on a greater role in the company's future business growth.
The financial report showed that BYD's basic earnings per share in the first quarter were 0.4480 yuan, down 56.89% from a year earlier.
($1 = 6.8364 yuan)
