"King of the Roll" BYD is facing a "roll kill"

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Source: Zishihui

Profit evaporates, price-war quagmire, cash flow plunges, debt surges wildly, and overseas reckless bets.

Author | Zishifenzi

In 2025, for BYD, it is still that “overpowered” existence.

With 4.6 million units in sales, it not only “kills it” in the China market, but also sits firmly on the throne of global new energy vehicles. Revenue first breaking 800 billion, overseas exports first surpassing one million vehicles, four consecutive years as the global new-energy sales leader… What these figures piece together is a picture of a “clearly ahead” golden age.

However, when the spotlight falls on the financial statement numbers, outsiders see not only a carpet of flowers, but also pressure as if burning on open fire—profit evaporation, the price-war quagmire, cash flow’s sharp drop, debt racing upward, and overseas gamble after gamble.

BYD, known as the “king of the grind” in the new energy vehicle sector, encountered a “grind to death” in China’s domestic market in 2025.

01

The curse of growing revenue without growing profit returns

If BYD in 2024 was “every winner takes all,” then BYD in 2025 is “fighting through winter at all costs.”

In terms of scale, BYD’s performance is undoubtedly impressive. Total annual sales surpassed 4.6 million units, with revenue as high as 803.97B yuan, up 3.46% year over year. These figures are enough to leave the vast majority of peers in the dust.

However, when attention shifts from the “face” to the “substance,” a rather awkward reality emerges: attributable net profit was only 32.62B yuan, down 18.97% year over year.

This is the second time in nearly four years that BYD has once again shown a clear “growing revenue without growing profit” pattern. The previous occurrence was in 2021, when BYD was constrained by rising raw material prices. But this time, it is the inevitable cost of extreme industry over-competition.

In 2025, price wars in China’s automobile market have evolved from “localized conflicts” into “total war.” Starting at the beginning of the year, whether it was the Qin PLUS with “electricity cheaper than gasoline,” or the Song lineup that used to be hard to find despite adding a markup, BYD’s major lineup models all fell deep into the vortex of the price war.

To hold onto its precarious market share, BYD had to deploy the deadly move of “trading price for volume.” This may have successfully blocked competitors, but it directly pierced its own profit moat. The most straightforward indicator is the continued breakdown of gross margin. In 2025, BYD’s overall gross margin fell to 17.74%, showing a continuous downward trend (gross margin was 20.21% and 19.44% in 2023 and 2024, respectively).

As the core auto business that functions like a “profit milk cow,” its gross margin also decreased by 1.82 percentage points year over year, from 22.31% in 2024 to 20.49% in 2025. At first glance, the fluctuation is less than 2 percentage points. But measured in absolute terms, it reflects the “evaporation in the real world” of roughly 100.6k yuan in profit.

If you think that figure is still not shocking enough, take a look at the single-quarter performance: In 2025’s second quarter, gross margin dropped quarter-over-quarter sharply to 16.27%, the lowest single-quarter level since the second half of 2022.

In the second half of 2025, BYD’s revenue and net profit even encountered a “setback,” especially in the fourth quarter: revenue fell 13.52% year over year, while attributable net profit plunged 38.16% year over year.

It’s worth noting that the fourth quarter is usually a key period for automakers to push volume. Such a massive retreat in profits indicates that, to hold market share, BYD was willing to adopt even more aggressive promotional strategies at year-end. This “trading price for volume” is weakening the company’s fundamental earning base.

More importantly, BYD’s revenue in the domestic market (including Hong Kong, Macao, and Taiwan) saw a 11.17% decline in 2025—an extremely dangerous signal. Even with price cuts and new launches, BYD’s “cake” in the domestic market has become hard to expand. When incremental markets turn into a stock-versus-stock game, facing numerous competitors such as Geely, Chery, Xiaomi, Li Auto, AITO, and others, even the “king of the grind” BYD is starting to find itself unable to keep grinding.

From the latest production and sales quick report, BYD’s trend has not changed. In the first two months of 2026, both production and sales declined year over year—down 38.4% and 35.8%, respectively. Meanwhile, in February 2026, total exports of new-energy vehicles reached 100.6k units, which is higher than the figure of 67k units in February 2025.

02

Overseas fish are pricier, but the storms are bigger too

When faced with China’s “red ocean,” going out to find a “blue ocean” is a way out—this is the biggest highlight in BYD’s 2025 financial report.

In 2025, BYD’s revenue from overseas reached 67k yuan, accounting for the first time close to 40% (38.65%). More reassuringly, the gross margin of its overseas business was as high as 19.46%, significantly higher than the domestic 16.66%. This indicates that BYD is not only selling more overseas, but also selling at higher prices; its brand premium capability is emerging, and the logic of “making money by exporting” has been validated.

However, high gross margin does not automatically mean high net profit, because the costs of going overseas cannot be ignored.

First, it’s a “military-style arms race” in logistics. Due to tight international ro-ro vessel capacity and high freight rates, BYD had to start building its own export fleet. In 2024, BYD had only “EXPLORER NO.1” and “BYD CHANGZHOU.” In 2025, it had cumulatively投入 into operation 8 ro-ro vessels. While this can save transportation costs, shipbuilding itself is an extremely large capital expenditure.

According to the annual report, BYD’s cash outflow from investing activities in 2025 reached 310.74B yuan, which is 68.3 billion yuan more than in 2024. A large portion of that went toward these “heavy-asset” deployments. This logic of “spending a fortune to build ships to save on freight,” while strategically meaningful, is also an “expensive” gamble—and in the short term it unquestionably increases the burden on the financial statements. Its payback period is long and full of uncertainties.

Second, overseas factory construction is a “marathon.” In July 2025, BYD’s Brazilian passenger vehicle plant achieved from groundbreaking to the first vehicle rolling off the line in just 15 months, becoming its first passenger vehicle plant in Latin America. In the same month, the Thai plant celebrated its first year since production ramp-up and successfully delivered its 90kth new energy vehicle locally. At the same time, the company was also advancing the preparation and construction of its Hungary plant. BYD’s globalization is shifting from “exporting products” to “exporting capacity.”

While this shift in model can avoid tariff barriers and go deeper into local markets, the upfront investment is enormous. The amount of construction in progress surged from 197.46B yuan at the beginning of the year to 90k yuan by year-end, confirming the pace of this global expansion.

Finally, as overseas market share expands, BYD will inevitably face more complex political risks and regulatory barriers. Whether it’s the European Union’s anti-subsidy investigations or other markets’ entry restrictions, it means that overseas may have “more meat,” but the “bones” are also more likely to be stuck.

A more complex overseas market environment tests BYD’s ability to operate globally—much more severe than simply selling cars.

03

Cash flow alarms and a surge in liabilities

If the above counts as BYD’s external injuries, then structural tension in cash flow is the internal injury it cannot afford to ignore.

For a long time, BYD has been synonymous with “plenty of cash.” In 2024, its cash reserves were as high as one trillion yuan.

But in 2025, warning signals appeared: net cash flow from operating activities dropped sharply from 19.95B yuan in 2024 to 48.29B yuan in 2025, a year-over-year decline of as much as 55.69%. The company’s monetary funds also fell from 133.45B yuan in 2024 to 59.14B yuan in 2025.

Where did the money go? Besides the massive capital expenditures mentioned earlier such as buying ships and building overseas plants, and the increased payments to suppliers, the biggest destination is that “bottomless” R&D investment.

In 2025, BYD’s R&D spending reached an astonishing 102.74B yuan, up 17.13% year over year, setting a new historical high—an amount even nearly double the company’s full-year net profit.

From the “super e-platform” to fast-charging technology, from the “Heavenly God’s Eye” intelligent driving system to the second-generation blade battery, and even its self-developed chips—BYD’s technical muscle is indeed formidable. But such high-intensity investment is, in essence, a race against time. When the growth rate of R&D expenses far exceeds the growth rate of revenue, it is both the engine for the future and the “cash-eating monster” of the present.

To make up for the huge funding gap, BYD chose to balance things out by raising funds and using leverage.

In 2025, BYD’s short-term borrowings increased from 75.43B yuan at the beginning of the year to 63.44B yuan by year-end, while long-term borrowings rose from 12.1B yuan at the beginning of the year to 38.49B yuan by year-end. Its net cash flow from financing activities reached an astonishing 8.26B yuan, a year-over-year change of 1118.88%, for the first time breaking through the one-trillion-yuan mark.

The company explained that this mainly resulted from increased proceeds received from the placement of H shares, obtaining loans, and issuing bonds compared with the same period of the previous year. On one side, net profit declines; on the other, it uses debt to make room. BYD’s “string” is visibly tighter.

Wang Chuanfu said plainly in his annual report address that the new energy vehicle industry is undergoing a brutal “elimination round.” Now, BYD may have high revenue, leading technology, and rapid overseas expansion, but it is also facing the real dilemmas of thinning profits, fierce competition, and rising liabilities. The BYD that is “all-capable” is encountering challenges like never before.

Maybe BYD is sacrificing short-term profits in exchange for future “tickets.” Whether this big ship can sail smoothly toward the golden coast still needs to be tested by time.

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责任编辑：杨红卜