BambooWorks·2026-01-12 09:53Core Viewpoint - BYD has surpassed Tesla in global electric vehicle sales, but faces challenges in profit margins, rising risks in overseas markets, and a controversial financing model, leading to market skepticism about its ability to continue creating shareholder value [1][3]. Sales Performance - BYD achieved a significant increase in global sales, with a target of selling 2.26 million electric vehicles by 2025 and a 145% year-on-year growth in overseas sales. In contrast, Tesla's deliveries fell by 8.6% to 1.6 million units, marking its largest annual decline [3][4]. - In the Chinese market, BYD has established a dominant position, with Tesla experiencing its first sales drop of over 5% since the launch of its Shanghai factory [3]. Profitability Challenges - Despite the surge in sales, BYD's profitability has been under pressure, with a 32.6% year-on-year drop in net profit to 7.8 billion yuan (approximately 1.1 billion USD) in Q3, marking the largest decline in over four years. Revenue also saw its first decline in over five years, dropping to 195 billion yuan [6][8]. - BYD's gross margin was reported at 17.9%, comparable to Tesla's 18%, but its per-vehicle profit fell to 4,800 yuan, significantly lower than Tesla's projected profit of around 6,000 USD per vehicle for 2024 [7]. Market Competition and Risks - The domestic market is highly competitive, with rivals aggressively pursuing sales at low margins, which could further compress BYD's profitability. Additionally, rising vehicle purchase taxes and reduced government subsidies for lower-end electric vehicles pose further challenges [8]. - Analysts predict a slowdown in China's electric vehicle market, with expectations of declining sales by 2026, which may force BYD and its competitors to offer more consumer subsidies, further squeezing profit margins [8]. International Expansion and Financing Model - In response to domestic pressures, BYD is accelerating local production in Southeast Asia, Latin America, and Europe to avoid tariffs and shorten delivery times. However, establishing overseas factories has become increasingly complex due to scrutiny from local governments [9][10]. - BYD's controversial financing model, known as "Di Chain," has come under scrutiny, with the company being urged to reduce payment cycles to suppliers. As of May 2023, the related debt had ballooned to over 400 billion yuan, with an average payment cycle extending to 127 days [10][11]. Market Sentiment and Future Outlook - Despite the challenges, many analysts believe BYD is undervalued, with a majority recommending "buy" or "outperform" ratings. However, notable investors, including Berkshire Hathaway, have reduced their holdings, indicating a lack of confidence [11].