Record drop in BYD profit: What happened?
BYD, the world’s largest seller of electric vehicles, recorded its sharpest quarterly profit drop since 2020. This signals growing pressure in the Chinese market, despite successes abroad. According to the latest report, net profit in the first quarter of 2026 fell by 55.4% compared to last year, reaching 4.09 billion yuan (approximately 597 million US dollars).
Decline in sales and revenue
The company’s revenue decreased by nearly 12% — to 150.2 billion yuan (22 million dollars). This is the third consecutive quarterly decline and the lowest revenue figure since the second quarter of 2024. However, the result still exceeded analyst expectations, who had forecast revenue between 132 and 140 billion yuan. During the quarter, BYD sold 700,463 “new energy vehicles” (electric vehicles and hybrids), which is 30% less than last year and nearly 48% below the record figures of the fourth quarter of 2025.
Reasons for the downturn: Price wars and subsidy changes
The Chinese electric vehicle market is extremely competitive. BYD became a leader thanks to its inexpensive models, but price wars in the domestic market are very fierce. At the same time, the government reduced subsidies. In 2024–2025, China fully exempted “new energy vehicles” from the purchase tax, but for 2026 and 2027, the benefit was halved — to a maximum of 15,000 yuan per car.
This policy change pushed demand forward into the fourth quarter of 2025, worsening the decline in the first quarter of 2026. Sales in China have been falling for several consecutive months, and profits are shrinking, even despite the growth in exports.
Global expansion as a lifeline
BYD is betting on foreign markets due to falling domestic sales. The company plans to export over 1.5 million vehicles this year to compensate for weak sales at home. Industry experts forecast significant export growth next year, but overall delivery growth is likely to be less aggressive.
This strategic shift was noticeable at the Beijing Auto Show, where BYD presented new products for the premium segment, including the Datang (Great Tang) — a full-size electric SUV starting from 250,000 yuan, which gathered over 30,000 pre-orders on its first day. Expanding beyond budget models should help the company maintain profitability amid the price war in the mass market.
Return of technological leadership
The company has also focused on restoring its technological advantage. BYD is improving charging speed and other features to attract consumers who are not rushing to switch from internal combustion engine vehicles.
A critical moment for BYD
BYD is now at a crossroads. Its expansion abroad could be the answer to whether the company can recover. Analysts believe the next few quarters will be decisive, with a recovery in domestic electric vehicle demand and strong export growth being key factors for restoring profit.
The situation surrounding BYD demonstrates how even a market leader can face serious challenges due to changes in government policy and extreme competition. The reduction of subsidies in China created an effect of “artificial” demand at the end of 2025, leading to an inevitable downturn at the start of 2026. At the same time, active entry into international markets and attempts to establish a foothold in the premium segment indicate that the company is seeking new growth points. BYD’s success in the coming months will depend on how quickly it can adapt to new conditions and whether its global strategy can compensate for losses in the domestic market.