CHINA’S number one carmaker, BYD, has warned of an impending shakeout in the domestic electric vehicle sector after reporting a 19 per cent drop in annual net profit, despite continued sales growth.
In hard numbers, the giant Shenzhen-based carmaker posted a net profit of 33 billion yuan ($A6.87b) for the year ended December 31, as intensifying price competition (discounting) in China eroded margins.
Revenue, however, edged up 3.5 per cent to 804 billion yuan ($A166b).
Automotive media reported BYD chairman Wang Chuanfu saying the industry had reached a “brutal knockout stage”, with weaker players likely to be forced out as competition reaches “fever pitch”.
The warning reflects mounting pressure across China’s crowded EV market, where dozens of domestic brands are competing amid softening demand, excess supply and reduced government support.
BYD’s global sales of electric vehicles and plug-in hybrids rose 7.7 per cent to 4.6 million units in 2025, though its China deliveries fell 7.8 per cent to 3.55 million.
Profitability was hit harder, with net margin declining to 4.1 per cent from 5.2 per cent the previous year.
Industry observers expect consolidation to accelerate, with some executives forecasting only a handful of viable players will remain over the next five years as weaker brands exit through factory closures or mergers possibly accompanied by job losses.
To counter slowing domestic growth, BYD is ramping up its international expansion, with overseas markets emerging as a key growth driver.
The company now operates in 119 countries and has invested heavily in export logistics, including a fleet of dedicated vehicle carriers. It is also building out production capacity globally, with new or planned facilities in Cambodia, Brazil and Hungary, alongside existing plants in Thailand, and Uzbekistan.
Overseas deliveries more than doubled in 2025 to 1.05 million units, helping lift international revenue by 40 per cent to 311 billion yuan ($A64b), representing 39 per cent of total revenue – up from 29 per cent the previous year.
Despite the challenging market conditions, BYD continues to invest heavily in new technology, with more than 120,000 engineers working across battery and vehicle development.
Recent breakthroughs include a second-generation Blade battery and ultra-fast charging capability, with BYD claiming the system can charge from 10 to 70 per cent in five minutes and up to 97 per cent in under 10 minutes under normal conditions.
The technology, already deployed in China, is expected to roll out to international markets later in 2026 as BYD looks to strengthen its competitive position globally.