Winning the price war, but BYD is facing an even tougher challenge

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（Source: Leopard Change）

Author | Nana

Editor | Xing Yun

The throne of top seller is firmly secured, but the money in your pocket is getting smaller—this is the true portrayal of BYD’s 2025 performance report.

In 2025, BYD achieved 4.6 million vehicle sales for the full year, firmly holding the global New Energy sales crown. Full-year revenue exceeded 800 billion yuan, reaching a historical high, and it also maintained 3.46% year-over-year growth.

But net profit fell by nearly 20% year over year. In a market driven down by price wars, profits ultimately have to be paid for.

With subsidies phasing out, sales fluctuations, and high-end ambitions not yet truly breaking through, while actively clearing inventory, BYD also realizes it must open up sources of revenue in the next round.

With two major hard battles—brand upgrading and going overseas—still ahead, BYD is nowhere near a time to exhale.

1、The top-selling throne is getting hot

BYD is starting to increase revenue without increasing profits.

From the full-year data, in 2025 BYD’s revenue was 803.96 billion yuan, up slightly by 3.46% year over year, but net profit dropped by 18.9% year over year.

After winning the price war in two years to become the top seller, BYD still has to face the situation of selling more but earning less per unit. In 2025, BYD’s automotive gross margin was 17.74%, the lowest in nearly five years. Among them, the automotive business gross margin was 20.49%, down 1.8 percentage points year over year.

Based on a simple calculation of sales volume and corresponding sales revenue, BYD’s average sales price per vehicle in 2025 was 119,200 yuan, lower than in 2024. The price war may have preserved the top-selling position, but it has compressed the profit margin space per car.

Domestically, price wars hurt when it comes to volume; fortunately, overseas market expansion and a higher profit space have injected fresh blood into BYD. In 2025, BYD’s revenue from overseas reached 310.74 billion yuan, up 40.05% year over year, and its share of total revenue rose to 38.6%.

What the financial report is even more concerned with is that BYD’s operating cash flow plunged 55.7%, falling from 133.45 billion yuan in 2024 to 59.14 billion yuan in 2025. The financial report explains that this was mainly due to an increase in cash payments for purchasing goods and receiving services.

Behind this is an important move: BYD has taken the initiative to repay a large amount of supplier payables.

In 2025, driven by policy, leading automakers successively announced commitments to 60-day settlement terms for their supply chains. BYD was no exception. By the end of 2025, BYD’s accounts payable decreased from 241.6 billion yuan in the prior year to 186.7 billion yuan, a reduction of 54.9 billion yuan; other payables also fell by 25.5 billion yuan; and meanwhile, notes payable increased by 20.1 billion yuan. Taken together, these three items totaled a reduction of more than 60 billion yuan, meaning BYD intended to optimize and implement the suppliers’ payment terms problem, consuming a large amount of cash.

At the same time, BYD also has to invest heavily in areas such as R&D and overseas factories.

Data shows that BYD’s Q4 R&D expenses were 14.2 billion yuan, a slight quarter-on-quarter increase of 0.8 billion yuan; for the full year, R&D investment was 63.4 billion yuan, up 17% year over year. BYD’s Q4 marketing expenses increased quarter-on-quarter by 1.58 billion yuan to 7.7 billion yuan. In the end, investments in R&D and marketing expenses are all aimed at upgrading the brand.

R&D spending may be directed toward areas such as intelligent driving, energy replenishment, and “flash charging.” At the BYD press conference at the beginning of 2026, BYD unveiled an energy replenishment strategy of “oil and electric at the same speed,” achieving charging times of 5 minutes at room temperature and 9 minutes, and it also plans to expand the rollout of charging piles.

Marketing expenses are used to upgrade existing channels, especially going overseas. In 2025, BYD’s full vehicle exports surpassed one million units, up 1.4 times. According to data from TuoDian Touyan, in the second half of 2025 BYD’s overseas selling price per vehicle reached as high as 186,000 yuan, clearly acting as a key driver for raising the per-vehicle price. Therefore, this year BYD will continue to increase the layout of overseas sales channels, with plans to rapidly raise the number of European stores to 2,000.

2、After going all-in on leveling the price, go all-in on high-end

Using a price war to drive volume is a risky move, and BYD is now forced to swallow the bitter fruit.

What attracts customers is value-for-money; and precisely because these users are highly sensitive to price, any changes in pricing will directly affect their decisions.

Starting from New Year’s Day this year, the ten-year policy of full exemption from the purchase tax for new energy vehicles switched to a policy of charging at half rates. The tax rate was adjusted to 5%, and the maximum tax reduction per vehicle was reduced from 30,000 yuan to 15,000 yuan.

As soon as news of the 2025 phase-down emerged, BYD’s December monthly sales reached 420,000 units, but after the brief frenzy of rushing orders, sales kept sliding down continuously. In February 2025, BYD sold 190,000 vehicles, down 41.1% year over year; cumulative sales in January and February totaled 400,000 vehicles, down 35.8% year over year.

The second side effect is that the brand image has become fixed.

If you often take rides, you’ll find the probability of getting a BYD ride is very high, and the BYD Qin is one of ride-hailing drivers’ top choices. There’s a default rule in the auto circle: once a brand gets labeled as the “ride-hailing car god,” the difficulty of upgrading the brand increases by a lot.

For price-sensitive users, they won’t pay for brand premium; but users who are willing to pay for the brand premium also don’t want their cars to be the same as the ride-hailing fleet. BYD is stuck in this awkward middle gap.

Therefore, upgrading the brand upward is urgent. BYD also understands this.

In March this year, BYD released its second-generation Blade Battery paired with megawatt-level flash charging: it can replenish 400 kilometers in 5 minutes, and it plans to build 20,000 flash-charging stations nationwide by the end of 2026. This is not just an upgrade to charging; it is about paving the way for an upward brand move through improvements in product experience.

That same month, at NVIDIA’s GTC conference, Huang Renxun explicitly named and announced that NVIDIA and BYD would collaborate to jointly develop an L4-level automated driving model based on the DRIVE Hyperion platform. This is BYD’s largest-scale overseas high-end intelligent driving collaboration to date. Intelligentization is the necessary path for electric-vehicle brands to upgrade, NVIDIA’s global endorsement is also BYD’s groundwork for going overseas.

But the difficulty of brand upgrading is far more than “releasing a few new technologies.”

Different price positioning sells entirely different things. For users sensitive to value-for-money, they buy performance, space, and range; for users who want to buy into the brand, they pursue a symbol of identity and a lifestyle. Flash charging is a charging experience; NVIDIA is intelligent-driving endorsement. These are only the “foundation” for brand upgrading.

On top of that foundation, you still need clear brand positioning, a service system that can keep up, re-designed channels, and a brand story told from the beginning. Each item means burning money. For comparison, in the fourth quarter of 2025, NIO’s marketing expenses were 10% of revenue, while BYD’s were only around 3%.

But BYD’s profitability is already under pressure. In the fourth quarter, BYD’s net profit fell below market expectations. To systematically upgrade the brand, expenses will likely rise again, and profit will only become tighter.

Pressure from external competition is also increasing.

In the first two months of this year, Geely—the traditional automaker also undergoing a transformation—sold a total of 4.76 million units, surpassing BYD. Geely’s growth is driven by two legs moving at the same time: one leg is the gasoline car mainstay, the Geely Galaxy series, which sold 1.34 million units in January alone, up 86% month over month.

The other leg is the high-end brand Lynk & Co (Zeekr) taking on the overflow demand for higher positioning, forming a clear separation from the main brand. In February, sales grew 70% year over year.

Actually, BYD’s Denza and Yangwang also follow this logic, but at present the support points are not yet obvious.

In 2025, BYD’s three major high-end brands—Fangchengbao (Equation Leopard), Denza, and Yangwang—sold a combined 397,000 vehicles, up 109% year over year. Their share of total sales increased from about 5% in 2024 to nearly 9%.

However, with this less-than-10% share, it shows BYD’s high-end push hasn’t truly propped up the overall market. BYD’s net profit per vehicle fell year over year all year, indicating that the incremental profit brought by high-end brands has not fully offset the erosion of profitability caused by the price war in the low-end market.

3、Going overseas brings opportunities, but also problems

Brand upgrading is the mountain BYD must climb; going overseas is another gate it can’t avoid.

In 2025, BYD’s full vehicle exports for the first time surpassed one million units, becoming an important engine for raising the overall selling price.

Under the influence of international developments in 2026, oil prices surged, directly increasing the operating costs of gasoline vehicles. This also creates new opportunities for Chinese new energy vehicle exports. Previously, some media reported that BYD stores in Vietnam were packed with people, and that in the Philippines, a certain BYD store’s orders in a two-week period were already equal to a month’s worth of orders.

At the end of March, during a financial report communication meeting, BYD management raised its 2026 overseas sales target again, increasing it from the previous 1.3 million units to 1.5 million units.

Overseas markets are seeing major opportunities, but how to capture them is full of challenges.

From a long-term strategy perspective, building factories overseas is the necessary path to avoid trade barriers and root locally. Previously, BYD’s progress on self-built factories did not meet expectations. Whether in Europe or South America, there were numerous obstacles in site selection and land implementation, policy approvals, supply chain support, and local labor hiring. The longer factory construction cycle means BYD cannot achieve overseas production capacity autonomy and controllability in the short term, and the cost advantage and delivery efficiency of locally supplied inputs are also hard to realize.

At present, it looks like BYD will be able to achieve a breakthrough in overseas localized production in 2026. After the BYD Camaçari factory in Brazil officially began production in July 2025, it will gradually expand capacity according to order volumes, and it is expected to reach 300,000 units in the second half of 2026.

BYD’s first European factory in Hungary also begins trial production in the first quarter of 2026, with plans to move into mass production in the second quarter. When this factory’s capacity is in place, it means BYD can avoid uncontrollable risks associated with sea transport, while also bypassing potential policy risks from the EU. Recently, the EU’s anti-subsidy review targets for Chinese-exported automobiles are expanding from pure electric vehicles into hybrid models. If BYD’s Hungary factory can smoothly begin mass production, it will enhance BYD’s competitiveness in the European market.

On the other hand, before overseas factories fully take over, BYD’s exports still rely heavily on sea freight transport.

Due to the tense situation in the Middle East, shipping through the Strait of Hormuz has been obstructed, forcing cargo ships from Asia to Europe and the Americas to detour via the Cape of Good Hope in Africa. Although BYD also has its own marine shipping fleet, against this backdrop, the time costs, capital costs, and uncertainties of going overseas are all increasing, and in the short term this will still erode overseas profits.

Meanwhile, brand positioning is equally important in the overseas strategy: how to get foreign consumers to accept a non-local brand is a key focus of overseas marketing. For example, Geely completes “getting recognized on sight” by acquiring local brands.

And if BYD does not take the acquisition route, it needs to start everything from scratch. Moreover, in different countries and regions, BYD will also face policy obstacles and insufficient energy replenishment infrastructure—these are not problems that can be solved in a short time.

In 2026, high oil prices are the “timing,” factory landing is the “geographical advantage,” and the true “human alignment”—brand recognition and the service system—still needs BYD to build it step by step itself. The answer sheet for a “going-overseas” battle for speedsters is far from time to submit. But how to answer this question is crucial for BYD, especially in a competitive situation where the price-war victory leaves almost no spoils and the rivals are relentlessly chasing.