Early on Monday, Chinese EV and battery giant BYD (BYDDF) released first-quarter earnings that were lower than anticipated. However, gross margins reached all-time highs in spite of recent price reductions that have boosted demand. Monday morning saw a slight increase in BYD stock.
Following Elon Musk’s visit to Beijing, Tesla (TSLA) saw a spike in early Monday trading after achieving significant Full Self-Driving victories in China.
BYD Profits
Although it was down 47% from Q4 2023, the company’s net income increased 10.6% to 4.569 billion yuan ($630.87 million). $657 million, or 4.753 billion yuan, was what analysts had predicted. To 124.944 billion yuan ($17.25 billion), revenue increased by 4%. Views totalling 131.718 billion yuan were missed.
Ahead of schedule, the company declared that 626,236 EVs, including 300,114 passenger BEVs, were sold in Q1. While it was up 13.4% from a year ago, it was a significant decrease from Q4’s 944,779 figures. Despite a lacklustre beginning to 2024, partly attributed to the Chinese New Year holidays and additional seasonal variables, BYD sold 302,459 units in March alone, comprising 139,902 BEVs.
The large price reductions that followed in March spurred demand and gave EV and gas-burning competitors a competitive advantage. It seems that the high demand persisted until April. Although R&D investment increased by 70% and significant price reductions were implemented, the company’s gross margins reached a record 21.88% in Q1 2023 compared to 20.21% in Q4 2023. BYD Auto has significantly greater gross margins.
Part of the reason for BYD’s increased gross margin is decreased lithium prices, which lower battery costs. On Wednesday or Thursday, BYD will release its April sales data. On Wednesday, Chinese EV manufacturers Li Auto (LI), Nio (NIO), and XPeng (XPEV) will release their April sales figures. A lot of EV announcements have been made by the company in relation to the Beijing Auto Show.
China has unveiled further incentives to encourage people to trade in their old gas-guzzling cars for electric vehicles (EVs) or ICE cars with reduced emissions before the end of the year. This is in line with a new policy that was unveiled on Friday. The RMB 10,000 ($1,409) subsidy may be especially advantageous to EV manufacturers like BYD, who sell a lot of vehicles at low or moderate prices. The subsidy will make up a bigger portion of the vehicle’s price.
BYD Shares
The U.S. over-the-counter stock price of BYD increased 1.5% to 27.60. Last week, the company’s stock increased 6% to 27.18. Although the stock is currently trading below the 200-day, it may be about to form a new base above the 50-day line.
On Monday, Tesla surged 15.3%, breaking above its 10-week moving average. Despite Q1 earnings and sales that were much lower than anticipated, shares increased 14% last week as Musk touted FSD, inexpensive EVs, and other topics.
