China’s largest electric vehicle maker BYD posted revenue higher than its US rival Tesla for the first time, even though the price war in China hit profit margins.
BYD’s revenue in the third quarter amounted to 201 billion yuan (about 26 billion euros), surpassing the 25.2 billion dollars (23.2 billion euros) in sales that Tesla reported last week.
The Chinese automaker sold a record 1.1 million cars between July and Septemberdriven by new subsidies granted by the Chinese Government for the purchase of electric vehicles.
However, the 24% increase in sales came at the expense of a drop in BYD’s gross margins, from 22.1% last year to 21.9% in the third quarter. Net profit stood at 11.6 billion yuan (1.5 billion euros), a year-on-year increase of 11.5%.
Instead of offering discounts directly, BYD has launched high-end models equipped with more advanced features at lower prices than previous versions in recent months..
This strategy helped BYD consolidate its market leadership, at a time of fierce competition, but reduced the group’s net profit per vehicle, according to analysts.
The price war in the world’s largest auto market is hitting the profit margins of Chinese brands and foreign automakers.
Due to a high level of vertical integration, including control over battery and semiconductor chip production, BYD’s gross margin of 21.9% is still well ahead of Tesla’s 17% and its Chinese rivals Zeekr, at 14 .2%, and Xpeng, with 6.4%.
Analysts argued that overseas expansion will be key to BYD’s future growth.in a context of growing Western protectionism.
On Tuesday, the European Union (EU) decided to impose additional customs duties of 17% on imports of BYD electric vehicles, in addition to the existing 10% tariffs.
Although BYD recently opened a factory in Thailand (its first production base outside China), overseas sales accounted for only 7.9% of total monthly sales in September, down from 9.8% a year earlier.
Source: Observadora
