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China’s EV price war: BYD, Li Auto sell more with thinner margins, as discounts intensify

China’s only profitable EV builders rebound from poor first-quarter performance, with BYD’s second-quarter earnings nearly doubling

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Workers assemble an EV inside a BYD factory in Rayong, Thailand, on July 4, 2024. Photo: Reuters
Daniel Renin Shanghai
BYD and Li Auto, the only two profitable electric vehicle (EV) makers in mainland China, have returned to the fast track with higher second-quarter earnings, despite a price war that is eating into margins even as it lures more drivers to join the growing ranks of EV owners.
Shenzhen-based BYD, the world’s largest EV builder, earned 9.1 billion yuan (US$1.28 billion) for the three months ending June, up 98.4 per cent from the first quarter and 32.8 per cent year on year. First-half profit of 13.6 billion yuan fell short of a consensus analyst forecast of 17.9 billion yuan in a Bloomberg survey.
Beijing-headquartered Li Auto said its second-quarter profit jumped 86.2 per cent from the previous three months to 1.1 billion yuan, barely exceeding a forecast of 1.06 billion yuan in a Bloomberg survey. In the preceding three months, its profit plunged 90 per cent from the previous quarter to 591 million yuan.
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“Top players have shown their resilience after getting off to a slow start this year,” said Ding Haifeng, a consultant at Integrity, a Shanghai-based financial advisory firm.

BYD’s second-quarter performance was its second-best, behind a 10.4 billion yuan profit in the third quarter of 2023. In the January-to-March period, BYD reported a 47.3 per cent quarter-on-quarter decline in profit to 4.6 billion yuan.

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BYD did not provide second-quarter 2024 numbers directly; the figures above were derived by comparing its first-half figures and its first-quarter results, published in April in Hong Kong stock exchange filings.

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