Summary of Key Points
BYD's revenue in the first half of 2026 declined slightly (7.1% year-on-year), but profits increased in the second quarter (29.7% year-on-year). Sales began to recover from a significant drop in the first quarter, with an increase in May and a 21.8% year-on-year growth in July. The company continues to focus on both pure electric and hybrid vehicles, dispelling rumors of abandoning hybrid models. Its fast-charging technology has progressed rapidly, with 10,000 fast-charging stations installed within half a year. Although export sales have increased significantly, they have not yet generated substantial profits due to factors such as scale and tariffs. BYD is transitioning from a focus on cost competitiveness to a focus on technological leadership.
I. Performance: Revenue Decline, but Profits Improve; Sales on the Rise
BYD's revenue for the first half of the year was 344.8 billion yuan (7.1% decrease year-on-year), but profits in the second quarter were 8.24 billion yuan (29.7% increase year-on-year), a significant improvement from the 55.4% decline in the first quarter. Sales decreased by 30% year-on-year in the first quarter and narrowed to a 3% decrease in the second quarter, with a turnaround in May and a 21.8% year-on-year increase in July.
Why this change? On the one hand, there is external competition from peers who are cutting prices to attract customers, and domestic demand is weak. However, a more crucial factor is internal adjustments: the "Flash Charge China" initiative in the first quarter deterred customers from purchasing non-fast-charging models, but as fast-charging models were released, sales gradually recovered. Additionally, the upgrade of hybrid models to a range of over 200 kilometers made them popular overseas, significantly boosting total sales in the second quarter.
II. A Balanced Approach to Pure Electric and Hybrid Vehicles: Letting Consumers Decide
BYD does not favor either pure electric or hybrid vehicles; instead, it allows consumers to make their choice, with the sales ratio of the two types fluctuating around 50% annually. Why not abandon hybrid models? Because they are very popular overseas, especially in Europe and North America, where grid infrastructure is poor and power outages are common. Hybrid vehicles do not require charging stations and can even function as mobile power sources. Even if China's new energy vehicle penetration rate reaches 100% by 2035, hybrids will still account for a significant portion of the market. Rumors that BYD has abandoned hybrid research and development have been refuted by the company, which emphasizes that hybrid vehicles have a long lifespan.
III. Fast-Charging Strategy: Rapid Progress
BYD's fast-charging technology has been launched with great urgency: it was announced in March and was implemented in more than 20 models within half a year, breaking the traditional pattern of launching flagship models first before rolling them out to other models. The construction of fast-charging stations has also been rapid, with 10,000 stations installed in half a year (with a goal of 20,000 by the end of the year), and the company has partnered with companies like Sinopec and CNPC. The reason for this speed is the use of a "storage and charging integrated" solution, which allows the vehicles to store their own energy and does not rely on grid capacity, enabling flexible station construction. This not only enhances product competitiveness but also aligns with national energy strategies (aiming for 50 GW of vehicle-grid interaction by 2030).
IV. Exports: High Sales, but Not Yet Big Profits
Exports are a highlight for BYD: 973,000 vehicles were sold in the first seven months of 2026 (78.5% increase year-on-year), but substantial profits have not been realized yet. There are several reasons for this:
1. Insufficient Scale: For example, although BYD has set up 250 outlets in Germany, only 23,000 vehicles were sold in 2025, far from achieving the scale effect that reduces costs.
2. High Tariffs: Germany imposes a 10% basic tax, a 17% countervailing duty, and a 20% VAT on Chinese vehicles, totaling nearly 50%.
3. Markup by Channels: A vehicle that costs 400,000 yuan in China is sold for 900,000 yuan in Germany, with 250,000 yuan going to taxes and 150,000 yuan to channels, leaving the manufacturer with only a 100,000 yuan profit. Larger scale and local manufacturing (to avoid taxes) are needed to realize higher profits.
V. Transition in the Market: From Competing on Price to Competing on Technology
In the past, the automotive industry focused on who could offer the cheapest vehicles (with similar size and specifications, price being the main factor). Now, BYD is shifting to a focus on technology: who can charge faster (with fast charging), who is safer (with blade batteries), and who can achieve autonomous driving first. Companies that still rely on cost competitiveness will gradually realize that they are on a different track from BYD.
*The above analysis is for reference only and does not constitute investment advice.*