BYD Co. reported another stellar quarter of earnings riding on the strength of booming sales of electric vehicles, which have helped the company surpass Volkswagen AG to become China’s top-selling car brand. According to a statement released on Thursday by the Shenzhen-based automaker, net income for the three months ending in March increased 411% from the same period last year to 4.13 billion yuan ($597 million). Operating income increased by 80% to 120.2 billion yuan, and gross margin increased by about 5.5 percentage points to 17.9%.
On Friday morning in Hong Kong, BYD’s shares increased 1.1%, bringing this year’s advance to 24%.
According to analysts Jeff Chung and Beatrice Lam of Citigroup Inc. and Tim Hsiao and Cindy Huang of Morgan Stanley, BYD’s margins should keep increasing this year thanks to the company’s Denza and U8 models. According to them, the company’s vertically integrated business model supported profitability.
The positive 1Q results from BYD support our belief that, despite increased competition due to declining subsidies and price cuts by competitors, cheaper batteries and larger scale benefits are supporting margin stability. Launches of new models have maintained strong demand and low inventory.
![BYD](http://indiaevnews.com/wp-content/uploads/2023/04/20230103022248_BYD_Seal-1024x678.jpg)
In the third quarter, sales of BYD’s passenger electric vehicles nearly doubled to 550,000 worldwide. While the company has been stepping up its efforts abroad, focusing on markets in Europe, Latin America, and Asia, about 440,000 of its sales during the period were in China, accounting for about 40% of all EV sales in the largest auto market in the world.
According to Bloomberg Intelligence, BYD, whose biggest investor is Warren Buffett’s Berkshire Hathaway Inc., plans to deliver 3 million to 3.7 million electric vehicles this year after selling 1.86 million in 2022, more than it did in the previous four years combined.
According to Jack Shea, founder and chief financial officer of Shenzhen-based fund Snow Bull Capital, which owns a stake in the EV manufacturer, BYD posted its third-highest net income on record despite spending on new factories, R&D, and research and development as well as being the seasonally slowest quarter.
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