China's BYD on Tuesday reported skyrocketing earnings for the fourth quarter and full year, as expected and as a price war grows in the world's biggest EV market. BYD stock popped.
On Jan. 30, the Chinese EV and battery giant, which outsells Tesla in China, gave a robust preliminary profit outlook for Q4 and 2022 in late January. Its final results Tuesday were in line with its earlier forecast.
BYD Earnings
Early Tuesday, BYD posted a Q4 net profit of 7.3 billion yuan ($1.06 billion) vs. 602 million yuan a year earlier. For all of 2022, net profit vaulted 446% to 16.6 billion yuan, said the Warren Buffett-backed company. It reported full-year revenue of 424.06 billion yuan, jumping 96% year on year. BYD Auto revenue surged 152%.
Earlier, on Jan. 30, BYD preannounced full-year 2022 net profit of 16 billion yuan-17 billion yuan ($2.37 billion-$2.52 billion), up 425%-458% in local currency terms. That implied Q4 net profit of 6.7 billion yuan-7.7 billion yuan ($990 million-$1.17 billion), up 1,013%-1,179% in local currency.
BYD's sales derive from automobiles, mobile phone parts and batteries.
A Reuters report last week said that BYD is scaling back production due to weaker industrywide demand in China since the start of the year, even as new plants are coming online. China is the world's biggest and fastest-growing market for electric vehicles (EVs), but growth is slowing.
Amid an EV price war in China triggered by Tesla, BYD in March launched new EVs with lower prices, while discounting other models. Tesla's price cuts were seen to target some BYD models.
BYD Stock
Shares of BYD, which trade over the counter, climbed 3.9% to 27.53 on the stock market today. BYD stock is moving above the 21-day line but is below the 50-day and 200-day moving averages after a rally to kick off 2023 faltered.
Still, BYD stock is up nearly 11% in 2023. It slumped 27.7% in 2022.
Tesla stock shed 1.4% Tuesday, after finding support at the 50-day line last week.
China EV startup Li Auto jumped 6.6%, moving above the 50-day line and nearing the 200-day line within a bottoming base. Nio gained 3%, still below the 50-day. XPeng leapt 5.6%, bouncing from near the 50-day.
China EV Price War
In 2022, Warren Buffett-backed BYD, the runaway leader in China's mass market for electric cars, tripled its EV sales, including hybrids, capped by strong Q4.
But production fell sharply in January and February. That was partly due to Covid and the China New Year holidays, but also due to an end to subsidies in China and an ensuing EV price war, set off by Tesla.
In March, BYD began offering discounts for its Song and Seal EVs to fuel demand. It has also launched new Han and Tang EVs with lower prices.
BYD's Q4 margins will be important. But those may not show price pressures that are developing this year.
In Q3, BYD's gross margin was 18.96%, up from 14.39% in Q2 and 13.33% a year earlier. BYD Auto gross margin was 22.77% vs. 17.82% in Q2.
Q1 EV Sales
BYD and China startups Nio, Li Auto and XPeng will likely release March and first-quarter deliveries this coming weekend. Tesla will release global deliveries for the first quarter this weekend as well, likely on Sunday.
On Tuesday, weekly China EV registrations showed BYD registered 43,490 units last week, up 13% from the week before and the best weekly figure of 2023. That doesn't include BYD's premium Denza unit, which had registrations above 2,000. They also don't reflect BYD's emerging export business.
Tesla registered 15,886 units for the week, down 15% from the week before. That followed four straight weeks of rising sales.
