In today’s automotive industry, competition is fierce, and the disparity between sales and profits is becoming more prevalent. This is evident from a car industry executive's recent call to “stop the over-competition.” In reality, competition is necessary for any industry's development, but can any company balance both sales and profits in such a challenging environment? The answer is yes, and BYD is a prime example. Let's let the numbers do the talking.
2024 Semi-Annual Report: BYD Continues to Surpass Expectations
Recently, BYD released its 2024 semi-annual report. According to the data, BYD’s revenue for the first half (H1) of the year reached 301.127 billion yuan, a year-on-year growth of 15.76%. Net profit stood at 13.631 billion yuan, while R&D investment hit 20.177 billion yuan, up 41.64% from the previous year, surpassing the same period’s net profit of 6.546 billion yuan. The gross profit margin rose to 20.01%.
On the surface, these numbers already confirm BYD's success, especially when compared to other struggling car manufacturers in the industry. In terms of revenue, BYD's H1 revenue of approximately 301.127 billion yuan even surpassed that of SAIC Group, a well-known player in the sector.
Revenue growth is crucial, and sales played a key role in this. According to the latest data from EasyCar, BYD’s sales in July have risen to third globally, only behind Toyota and Volkswagen. Earlier data from MarkLines also showed that in Q2 of this year, BYD surpassed Honda to become the world's seventh-largest car manufacturer. All of this contributed to BYD’s outstanding semi-annual report, and such a strong performance was expected.
Of course, we cannot ignore the fact that in today’s era of frequent “price wars,” simply looking at sales alone doesn’t provide the full picture of a car company’s health—it's the balance between sales and profit that truly matters. In this regard, BYD has been quite reassuring. While many car companies lose money the more they sell, BYD is making more profits with higher sales. For the first half of 2024. net profit increased by 24.44% to 13.631 billion yuan, making BYD the car company with the highest net profit in the Chinese market. This level of success is rare in the industry.
Behind the Impressive Results: BYD’s Heavy Investment
Revenue, sales, and profits all reached record highs for the same period, showcasing BYD’s undeniable strength. So, what are the reasons behind these stellar results? The answer lies in BYD's substantial investments. In today’s era, everyone talks about how technology drives success. However, many car companies make limited efforts in research and development (R&D). BYD, on the other hand, stands out as an exception, consistently putting its words into action.
In the first half of this year, BYD invested 20.2 billion yuan in R&D, a significant increase of 42% year-on-year, which translates to burning 110 million yuan on R&D daily. To illustrate how strong this investment is, let's compare it with net profit. BYD’s R&D investment in the first half of the year exceeded its net profit by 6.6 billion yuan. Since 2011. for 13 of the past 14 years, BYD’s R&D investment has surpassed its net profit, and in some cases, the investment was several times higher.
In other words, BYD prioritizes R&D over profits. As of now, BYD’s total cumulative R&D investment has approached 150 billion yuan. According to Wind data, among over 5.300 companies listed on China’s A-shares market, BYD ranks first in R&D spending, earning the title of the "R&D King" of A-shares. This level of investment is unmatched by most car manufacturers.
Comparing this with the 2024 semi-annual reports of mainstream car manufacturers, even Tesla, a company known for its strong R&D capabilities (with an investment of around 16.1 billion yuan), pales in comparison to BYD. BYD’s R&D investment is almost equal to the combined investments of Great Wall, Li Auto, Geely, and Changan. Specifically, BYD’s R&D spending in the first half was more than three times that of Great Wall and more than four times that of Geely.
Thanks to this, BYD boasts a strong R&D team and an engineering-driven culture. In 2024. the company hired over 10.000 new recruits from campus hiring, with more than 100.000 engineers focusing on core technologies, and R&D personnel making up nearly 80% of its workforce. BYD’s massive R&D investments have empowered it with a strong team and the confidence for independent innovation, which is key to its product success both domestically and internationally. From BYD’s successive releases in 2024 of its fifth-generation DM technology, “Heavenly Eye” intelligent driving system, Yifang and Sifang technology, E-platform 3.0 Evo, IGBT6.0. and SIC technology, it’s clear that these investments have significantly enhanced the competitiveness of its products and continue to lead the industry in innovation.
Conclusion
Success in the automotive industry is never without reason. BYD’s outstanding semi-annual report is a testament to its focus on technological R&D. Looking ahead, intense competition will remain the norm in the car industry. If BYD continues to invest heavily in R&D, we can expect even more surprises from the company in the future.
