BYD, China’s biggest electric automaker by sales, on Friday posted a bigger-than-expected profit drop and disclosed a headcount fall for the first time, hurt by weak sales in its home market.
Net profit fell 19% to 32.6 billion yuan ($4.72 billion), BYD said in a stock exchange filing, its first annual profit drop in four years and steeper than the average 12.1% fall expected by analysts polled by LSEG.
BYD could face a tougher earnings backdrop in 2026, as intense competition and softer domestic demand are likely to keep pressure on profit, even as overseas growth continues, analysts said.
The automaker was once propelled by its affordable Dynasty and Ocean series, but has been losing ground as rivals such as Leapmotor and Geely narrow its technological lead.
It was China’s biggest automaker in 2025 but fell to fourth place over the January to February period as its overall sales dropped by the most since the COVID-19 pandemic.
Revenue grew 3.5%, its weakest pace in six years, and the automaker cut its workforce by 10.2% to 869,622 as of 2025 end.
For the three months through December, profit slumped 38.2% to 9.3 billion yuan from a year ago, its third straight quarter of decline.
Gross profit margin from autos and related products, which contributed 80.7% to operating revenue, slipped to 20.5% last year, down 1.8 percentage points from a year ago.
POLICY SUPPORT STRONG, BUT MARGINS UNDER PRESSURE
BYD‘s shares in Hong Kong rose 3.7% ahead of the results and closed up 2.1% in Shenzhen.
The drop in profit, after years of rapid growth, raises doubts about BYD‘s earnings visibility, underscoring a more cautious view on the EV sector in the world’s largest auto market.
Although policy support remains strong, margins are under pressure as returns increasingly depend on scale, cost control and global expansion.
“We also recognise that competition in the (new energy vehicle) industry has reached a fever pitch, and is undergoing a brutal ‘knockout stage’,” BYD chairman Wang Chuanfu said, while reaffirming its overseas push.
“Focusing on tech upgrades would help drive competitiveness over price, while overseas sales and localisation remains a key focus for growth this year,” said Eugene Hsiao, an analyst at Macquarie.
BYD makes only all-electric and plug-in petrol-electric hybrid vehicles, so has suffered the most from the expiration of purchase tax exemption on new energy vehicles.
Sales were also impacted this year by revised subsidies favouring models priced higher than those in BYD‘s core budget segment.
Cars going for under 150,000 yuan ($21,699) accounted more than 61% of BYD‘s domestic sales in November, based on a Reuters analysis of the company’s filings and sales data from Chinese auto analytics platform DATADIC.
To revive sales, BYD unveiled 11 models with a faster-charging battery and pledged to grow its flash charging network. Still, the higher-priced lineup is unlikely to be enough to boost sales as consumers seek affordable options, analysts said.
BYD said it would expand sales abroad. Revenue of vehicle and related products increased by 5% last year, thanks to strong sales growth in overseas markets, which posted a better profitability.
The automaker faces tighter liquidity as it joined peers to make timely payments to suppliers following tougher regulations at home aimed at helping parts suppliers who have been battered by automakers’ price war.
Working capital for daily operations – or the excess of short-term assets over short-term liabilities – was minus 97 billion yuan compared with a deficit of 122.7 billion yuan at the end of June.
Among domestic peers, Geely reported a 36% rise in 2025 core net profit and Xpeng booked a first quarterly profit.
Reuters
