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China's leading electric vehicle maker BYD reported weaker-than-expected second-quarter results, marking its first quarterly profit decline in more than three years. The setback reflects both Beijing's crackdown on aggressive discounting and new rules on faster supplier payments that have squeezed margins.
Net profit fell nearly 30% year-on-year to 6.4 billion yuan ($897 million), well below market expectations of 10.7 billion yuan. Revenue rose 14% to 201 billion yuan in the April-June period but still missed analyst forecasts of 220 billion yuan. Gross margins slipped to 16.3% from 18.7% a year earlier.
The earnings disappointment comes after regulators ordered domestic automakers to curb heavy price cuts and settle bills with suppliers more quickly. BYD pledged in June to halve payment times to 60 days after long being criticized for extended terms and reliance on promissory notes instead of cash. Analysts said the changes, while improving supply-chain relations, have put additional strain on the company's balance sheet.
The clampdown has also cooled China's EV price war. Average discounts by major players including BYD and Tesla narrowed to about 6% in early August from 8% in June, according to Citi. Authorities fear the "neijuan," or internal competition, has fueled deflationary pressures and hurt global trade relations.
BYD's stock has already fallen 25% from May highs, when investor enthusiasm surged over its advanced driver-assistance system and five-minute charging battery.
Despite headwinds at home, the Warren Buffett-backed company is pushing deeper into overseas markets. Exports of battery-electric and plug-in hybrid vehicles more than doubled to 550,000 units in the first seven months of 2025. In Europe, BYD overtook Tesla in May sales and is preparing to start production in Hungary and Turkey to hedge against tariffs.
To support its global expansion, BYD has also built six car-carrying ships and signaled further investment in international production capacity.
Analysts warn, however, that meeting its ambitious target of selling 5.5 million vehicles this year may prove difficult after weaker sales in China during the summer.
