BYD’s Q2 profit soars 32.8%, fueled by $1B Türkiye expansion

Chinese electric vehicle (EV) manufacturer BYD has posted a significant 32.8% increase in net profit for the second quarter of 2024, despite ongoing price wars in the EV market.

The company’s financial strength is further underscored by its ambitious global expansion efforts, including a $1 billion investment in Türkiye, as it aims to cement its position as a dominant force in the international automotive landscape.

How BYD triumphed price wars

• Discount: BYD, the world’s largest EV producer, has achieved a 32.8% year-on-year increase in net profit for the second quarter of 2024, amounting to 9.1 billion yuan ($1.27 billion). This growth comes despite the company’s aggressive pricing strategy, which has involved significant discounts on its most popular models to stay ahead in a highly competitive market.

• Self-sufficiency: The company’s vertical integration strategy, where it manufactures most of its own components, including batteries, has been a critical factor in its ability to maintain profitability during price wars. This self-sufficiency not only reduces costs but also ensures better control over the production process.
• Global expansion: BYD has announced a $1 billion investment in Türkiye, signaling its intent to strengthen its international presence. This investment is part of a broader initiative to establish production centers worldwide, allowing the vehicle manufacturer to bypass restrictive tariffs and tap into new markets. The company’s international sales are projected to comprise nearly half of its total sales in the coming years.

How BYD decided to invest $1B in new EV plant in Türkiye

Ankara’s tariff policy: The Turkish Ministry of Trade has decided to impose an additional customs duty on petrol and hybrid passenger cars imported from China to boost domestic production and reduce the trade deficit.

• According to the decision published in the Official Gazette, imported vehicles originating from China are subject to an additional customs duty of ‘40% of the import value or $7,000 per unit, whichever is higher.’
• Following the Türkiye’s tariff decision, BYD announced plans to build a $1 billion plant in the western province of Manisa.

Win-win: The Chinese vehicle manufacturer’s $1 billion investment in Türkiye is a key component of its strategy to establish production hubs globally, mitigating the impact of tariffs and expanding its international market presence.

BYD vs Volkswagen

The company’s revenue for the April-June period also saw a substantial rise, increasing by 25.9% from the previous year to reach 176.2 billion yuan. BYD’s ability to significantly expand its market share in China has been particularly noteworthy, where it has outpaced Volkswagen, firmly establishing itself as the leading automaker in the country.

Between the lines: Despite intense price competition, BYD has continued to grow its market share, becoming the leading automaker in China and positioning itself for further global success.

What is next in BYD

Looking ahead, the company aims to boost its sales by 20% annually, leveraging its strong market position and expanding global footprint to drive growth in the increasingly competitive EV industry.