Recently, many publicly listed car companies released their financial reports for the first half of 2024. Few companies are willing to admit having "low profit per car" or using a "high-volume, low-margin" strategy. Such admissions are often seen as signs of poor performance in today’s sluggish market. However, BYD has demonstrated through its actions that this is the right approach for automotive profitability.
With a Profit of 8.500 Yuan per Car, Why is BYD So Unfazed?
Profit per car refers to how much money an automaker earns for each vehicle sold. According to BYD’s 2023 annual report, the company achieved a total revenue of 602.32 billion yuan, up 42.0% year-on-year, and a net profit of 30.04 billion yuan, up 80.7% year-on-year. At that time, some calculated that BYD’s profit per car was only 8.600 yuan.
What kind of level is this? If applied to an individual, an annual income of 8.600 yuan would be considered "extremely poor," barely enough to meet basic needs.
In the first half of 2024. BYD's total revenue reached 301.1 billion yuan, up 15.8% year-on-year, with a net profit of 13.63 billion yuan, up 24.4% year-on-year, and a gross profit margin of 20.0%, an increase of 1.68%. However, their profit per car dropped to just 8.500 yuan.
For most companies, such a scenario where all metrics are rising except for profit per car would lead to executive resignations or industry turmoil.
But for BYD, the company remains incredibly stable. The main reason lies in its skyrocketing sales volume. Gaining widespread customer approval is BYD’s top priority.
BYD has held the top spot in domestic sales for months, if not years. According to the latest data, BYD’s retail sales exceeded 370.000 units in August, surpassing the combined monthly sales of Volkswagen and Toyota. This "precise" market strategy has led to continuous growth in sales. Even as profit per car declines, BYD has achieved numerous impressive growth figures. In the first half of 2024. BYD's new energy vehicle (NEV) sales increased by 28.5% year-on-year, surpassing 1.61 million units, and net profit increased by 24.4% to 13.63 billion yuan. The growth in sales driving the increase in net profit is the reason for BYD’s confidence.
Using Resources Wisely
BYD is far from being an ordinary company, as seen from its historical financial performance. The company is adept at using its resources effectively.
The first key aspect is investing heavily in research and development (R&D). Data shows that in the 14 years from 2011 to the present, BYD's "R&D expenses" have exceeded its "net profits" in 13 of those years. The gap between the two is sometimes so large that the money earned from selling cars barely covers a fraction of the R&D costs.
For example, in the first half of this year, BYD’s R&D expenses reached 20.18 billion yuan, ranking first among all listed car companies and even all A-share listed companies. In the same period, the net profit was 13.63 billion yuan. To date, BYD’s cumulative R&D investment has nearly reached 150 billion yuan, surpassing the market value of some companies. If BYD had saved this money, it could have acquired several enterprises by now.
Instead, BYD has chosen to invest heavily in technological R&D, using this "watering" approach to help the company develop and grow. This isn’t surprising, as BYD originally thrived by identifying technological opportunities in the energy sector and seizing the moment to become a leader.
Now, BYD has entered its "explosive period." Recently, the company launched a wave of new vehicles, including the 2025 Seagull, Seagull 07 DM-i, Qin L DM-i, Song L DM-i, and a refreshed Han series. BYD's product lineup is undergoing a complete upgrade in terms of power systems, in-car technology, and intelligent driving systems.
Although less apparent, two other initiatives are also delivering significant benefits. One is cost control, as both "increasing revenue" and "cutting expenses" are essential. BYD has made significant efforts to optimize its R&D and production systems, achieving vertical integration, scale, and premiumization, while also meeting overseas market demands. This R&D and production system has become more flexible, coordinated, efficient, and reasonable.
For example, thanks to the recent decline in upstream material costs for lithium batteries, BYD has benefited from cost reductions and efficiency gains. The company immediately reinvested these gains into its products, benefiting customers.
The second initiative is expanding overseas markets. This has been embedded in BYD’s DNA since its inception. Even back in the day, BYD batteries were sold overseas, and its electric buses were operating in cities around the world. Its comprehensive maintenance and energy replenishment systems were also far ahead of competitors.
Whether in Europe or Japan, BYD’s "small cars" can be seen speeding along the roads. Moreover, BYD’s premium brands, such as Yangwang and Denza, have already tapped into the mid- to high-end overseas markets, showcasing the superior quality that Chinese NEVs have to offer.
BYD's accumulation in multiple fields has led to its current "explosive moment." More importantly, this growth does not harm consumers; rather, it allows them to purchase higher-quality products and enjoy better travel experiences. Those who will suffer are the joint ventures clinging to high prices without improving quality and the domestic brands with short-sighted strategies.
