BYD’s EVs have swept the world
In 2023, BYD’s electric vehicle delivery volume surpassed Tesla in one fell swoop and won the championship, with a global market share of 20.5%, while Tesla ranked second with a market share of 12.9%.
BYD currently has the capacity to produce about 4 million cars per year in mainland China, and has also built automobile factories in Brazil, Thailand, Hungary, and Uzbekistan to produce more cars. In the future, BYD also wants to add Indonesia and Mexico to the list of factories to be built.
BYD’s electric vehicles are not only sweeping the world, but even the electric vehicle markets of Japan and South Korea, the major automobile countries, cannot stop BYD. In order to protect its own automobile industry, the EU had no choice but to start claiming that BYD had a monopoly on low-price dumping and opened an investigation against BYD.
The United States was an early step forward and imposed a 27.5% tariff on imported electric vehicles for direct export to the United States, blocking Chinese electric vehicles from the door; it also prohibited the use of power batteries and other auto parts from China. There are various disguised obstructions to provide subsidies for the production of electric vehicles in the United States, but subsidies alone may not be enough, and new trade restrictions may be needed in the future.
Ford will lose more than US$64,000 for every electric vehicle sold in 2023. In comparison, BYD’s capabilities are even more evident. January 28, 2024
During the financial report briefing, Tesla CEO Musk praised mainland China’s domestic factories as the most competitive in the world, and admitted that “Chinese automakers will “demolish” global rivals without trade barriers.”
In February 2024, the prices of BYD’s Qin PLUS Honor Edition and Destroyer 05 Honor Edition both dropped to RMB 79,800: U.S. industry insiders said: The three giants in the U.S. auto industry may be destroyed by BYD.
My books that mentions BYD
- Section 3-3 of the book “The Rules of Super Growth Stocks Investing“
- Sections 1-3, 3-3, 5-8 of the book “The Rules of 10 Baggers“
Company Profile
Introduction
BYD (ticker: BYDDY) was founded by Wang Chuanfu in 1995. Its main business includes new energy vehicle-related automobile manufacturing, mobile phone parts and assembly business, rechargeable battery and solar panel business, and urban rail transit business. It is the largest new energy vehicle company in China. One of the manufacturers and mobile phone foundries.
BYD includes several major subsidiaries, including:
- BYD Auto, which produces cars
- BYD Electronics produces electronic parts and integrates
- FinDreams that produces automotive parts
Company discography
In 1995, BYD Industrial was established in Shenzhen. From the beginning, it insisted on independent research and development of products and directly intervened in the material development process of suppliers.
In 1997, global battery product prices plummeted and Japanese manufacturers were on the verge of losing money. However, BYD relied on its low-cost advantage to win large orders from Philips, Panasonic, Sony and even General Motors.
In the next three years, the company’s nickel-chromium batteries surprisingly occupied nearly 40% of the global market share, and it also began to develop nickel-metal hydride batteries and lithium batteries. In 2002, the company became the first Chinese lithium-ion battery supplier for Nokia (ticker: NOR).
Just when the battery business was booming, BYD officially entered the vehicle industry by acquiring Qinchuan Automobile in 2003. This was a move that was questioned and puzzled by countless shareholders at the time.
In 2006, the company established Huizhou BYD to supply power batteries for the company’s new energy vehicles.
In October 2016, BYD established a joint venture company in Qinghai Salt Lake and began the development, production and sales of upstream lithium resources. During the same period, the company launched the straddle-type monorail system (sky rail), once again entering the new urban rail transit field.
The founder
BYD, founded by Wang Chuanfu, started out by manufacturing batteries and then moved into mobile phone components. It then continued to acquire automobile companies and developed in the direction of gasoline-electric hybrid vehicles. It is a well-known figure in electric vehicles in China. On the 2009 Hurun China Rich List released on September 28, 2009, Wang Chuanfu became the richest man in mainland China with a net worth of 35 billion.
IPO
BYD was listed on the Hong Kong stock market in 2002, with Wang Chuanfu owning 27.83% of the shares.
How does the company make money?
Aotomotive
BYD Auto is the world’s largest electric vehicle manufacturer and a major global manufacturer of vehicles (pure electric and hybrid vehicles, buses, trucks, etc.).
In the first half of 2023, BYD’s global new sales increased by 96% year-on-year to 1.25 million vehicles. BYD ranked tenth in global car sales, and Tesla ranked fifteenth.
Calculated across all types of cars, China’s car export volume has surpassed Japan’s in the first half of 2023 (January to June), and will definitely surpass Japan in the whole of 2023, ranking first for the first time. According to the China Association of Automobile Manufacturers, China’s automobile exports surged 58% to 4.412 million units from January to November 2023 compared with the same period last year. Data released by the Japan Automobile Manufacturers Association on the 28th showed that Japan’s automobile exports increased from January to November. 15% to 3.99 million units, and Japan’s automobile export volume in 2023 is estimated to be only about 4.3 million units. Among them, BYD certainly plays the biggest key role.
In November 2020, BYD released the Xiaoyun plug-in hybrid dedicated 1.5L high-efficiency engine, which is the core component of DM-i super hybrid technology. This engine is specially developed to achieve ultra-low fuel consumption, with a thermal efficiency of up to 43%. It is currently the world’s most thermally efficient mass-produced gasoline engine.
Over the past ten years, the proportion of main business revenue of the automobile business has always remained above 50%. In 2022, BYD’s automobile and related product revenue will be approximately 324.691 billion yuan, an annual increase of 151.78%, accounting for 76.57% of BYD’s total revenue.
In 2023, BYD announced that it would build a factory in Hungary, becoming the first brand to set up a large-scale production base in Europe. This symbolized the transformation and development of electric vehicles and was also a key blow for Chinese automakers to counterattack Europe. In addition to establishing lithium plants in Chile and already in Hungary and the United States, BYD has also planned or planned to establish factories in Brazil, Thailand and other places to produce cars. Mexico, the Philippines, Morocco, Vietnam and Indonesia are also striving for BYD to set up factories.
Electric vehicle
In 2022, the sales revenue of pure electric vehicles will be 183%. BYD will sell 910,000 pure electric vehicles, with a profit margin of 183%, closely chasing Tesla’s 1.31 million units. If the total number of plug-in hybrid vehicles (PHEV) is included, BYD’s annual sales in the so-called “new energy vehicle” field reached 1.86 million vehicles, and it has maintained the championship for three consecutive years.
In August 2023, BYD held a factory launch conference for its 5 millionth new energy vehicle.
Electric bus
In 2023, Japan’s self-driving company TierIV will start selling self-driving electric buses, and the vehicles will be purchased from BYD. Blue Bird, Indonesia’s largest taxi company, also stated that most of its electric vehicles in 2023 will be purchased from BYD, which is more suitable than Tesla. As early as 2020, BYD had produced customized electric vehicles for Didi Chuxing.
Prior to this, BYD had successfully sold electric buses to Israel, Brazil, Spain, Hungary, Northern Europe, Colombia, Mexico, and other places.
By 2023, BYD will already be producing electric buses and electric vehicles in Brazil for the Latin American market. As early as 2017, BYD’s electric bus factory in the United States was completed, making it the largest electric bus factory in North America.
Moreover, BYD has set the time to stop production of fuel vehicles before 2040 in 2021 to achieve 100% sales of zero-emission medium and heavy-duty trucks. It is the first car company in China to set a timetable for the suspension of production of fuel vehicles.
Self-Driving
In May 2023, it was reported that BYD and Baidu’s self-driving software department Apollo had broken up, recruiting more than 4,000 software personnel, and planned to research smart car software on their own. However, for the hardware chip part, we will continue to purchase smart hardware from companies such as Huida and Horizon. In the second half of 2023, BYD will equip its Han series models with Horizon’s autonomous driving chip Journey 5, which is designed to compete with Huida’s Orin, but at a lower cost.
Auto insurance
In February 2023, BYD wholly acquired 100% of the equity of Yian Property Insurance. After BYD takes over Yi’an Property Insurance, it will apply to the China Banking and Insurance Regulatory Commission for insurance business qualifications and focus on new energy insurance business. Mainland China marketing expert Yan Jinghui analyzed that as BYD New Energy expands in scale, expanding its new energy insurance business will help it stabilize its basic customers and further expand user loyalty.
Battery
When BYD founder Wang Chuanfu served as deputy director of the Beijing Nonferrous Metals Research Institute, he noticed the opportunities brought by Japanese companies’ shift from nickel cadmium to high-value nickel metal hydride (NiMH) and lithium ion (Li-ion). In 1993, he discovered this market shift, moved to Shenzhen with his cousin Lu Xiangyang, and founded Shenzhen BYD Battery Co., Ltd. in 1995 to seize the opportunities brought by this industry trend. When BYD was established in February 1995, it focused on the R&D and manufacturing of rechargeable nickel-cadmium (NiCd) batteries.
By July 2002, BYD quickly became the world’s leading nickel-cadmium battery manufacturer, accounting for 65% of global production. Within seven years, BYD established itself as the second largest producer of nickel-metal hydride batteries and the third largest producer of lithium-ion batteries. Ten years later, BYD occupied more than half of the world’s mobile phone battery market and became China’s largest manufacturer of various types of rechargeable batteries (ranked among the top four in the world).
BYD was ahead of Tesla (US stock code: TSLA) in 2020, and was already the only enterprise group in the world that spanned the two fields of complete vehicles and batteries, with world-leading cores such as batteries, motors, and electronic controls. technology, the company’s power battery technology route has also evolved from lithium iron phosphate batteries with lower initial thresholds to later ternary lithium batteries.
BYD was an early car company that entered the battery field, and the batteries it originally made were not for electric vehicles, but for digital products, such as mobile phones. To this day, BYD still retains this business.
Tesla’s self-developed battery is the 4680 battery. Its current production is 800,000 units per week, and each battery is about 100 watt hours. Calculated based on a car’s battery pack of 65 kilowatt hours, the weekly output of the 4680 battery is, Only about 1,200 new cars (excluding cybertruck) can be supplied, while Tesla sold more than 170,000 vehicles in November. So strictly speaking, only BYD is the only car company that has taken the road of self-developed batteries, which shows how difficult this road is.
Electronic ODM
BYD Electronics produces mobile phone parts and assembles mobile phones for its customers on an OEM or ODM basis. It started producing mobile phone parts in the early 2000s and was officially established in 2002 as a subsidiary of BYD. BYD Electronics entered the mobile phone industry as early as 1995. Well-known brands such as Huawei, Samsung, Apple, and Google are its partners. On average, 2 out of 10 mobile phones worldwide use BYD Electronics technology.
In 2007, BYD spun off BYD Electronics into an independent subsidiary, which was registered in Hong Kong on June 14, 2007, and subsequently listed on the Hong Kong Stock Exchange in 2007.
In 2022, BYD’s mobile phone parts, assembly and other product business revenue will be 98.815 billion yuan, an annual increase of 14.3%.
In September 2023, BYD Electronics acquired Jabil (US stock code: JBL) factories in Chengdu and Wuxi for RMB 15.8 billion in cash, which is the largest acquisition in BYD’s history. This acquisition will expand the group’s customer and product boundaries, and expand its smartphone parts business.
After BYD acquires Flextronics’ foundry in Hunan and Jabil’s factory, it is expected to join the ranks of global electronics foundry giants in the future.
Semiconductor
BYD Semiconductor Co., Ltd. was established in 2020, formerly known as BYD Integrated Circuit Design Department established in 2002. Manufacturing and distribution of integrated circuits, insulated gate bipolar transistor modules, light-emitting diodes, monocrystalline silicon, etc.
BYD Semiconductor’s core product IGBT (Insulated Gate Bipolar Transistor) market share ranks first in China and second in the world. In the IGBT field, according to Omdia statistics, in the IGBT field, BYD Semiconductor’s market share reached 19% in 2020, second only to Infineon. This is of course inseparable from BYD’s car sales.
The company originally planned to issue an initial public offering, but canceled it in November 2022 as it chose to increase investment in wafer production.
Stacker
BYD Forklift was established in 2009, and the company has been selling forklifts since 2014. It mainly develops and produces electric stackers, with an annual production capacity of 30,000 units.
Energy storage
BYD Home Energy System, referred to as BYD HES, is an integrated product that combines solar panels, batteries, inverters, etc. The system uses solar energy to generate electricity and then stores it. Initially sold in Japan.
FinDreams Group
FinDreams
FinDreams is the name of five auto supplier companies owned by BYD. The companies announced their spin-off from BYD in March 2020. The Verdi subgroup was formed to increase parts sales to other automotive companies. These companies include Fordie Battery, Fordie Powertrain, Fordie Technologies, and Fordie Precision.
FinDreams Battery
FinDreams Battery was registered and established on May 5, 2019. Its predecessor was BYD Lithium Battery Co., Ltd. established in 1998. Its products include consumer batteries, electronic batteries, electric vehicle batteries and energy storage batteries. Fudi Battery is the world’s third largest electric vehicle battery manufacturer, with a global market share of 12% in the first half of 2022.
It specializes in the production of lithium iron phosphate (LFP) batteries, and its product name is “Blade Battery”.
It is a lithium iron phosphate battery (LFP) that is smaller in size and does not use nickel and cobalt. Director Wang Chuanfu once said that large-chip batteries are safer than other alternative products and are less likely to spontaneously ignite and catch fire.
In early 2022, the company and FAW Group began to build a joint venture factory called FAW Fudi to produce battery packs. BYD holds 51% of the shares and FAW holds the remaining shares. The factory is located in Changchun City, Jilin Province, and has a total designed capacity of 45GWh. The first battery pack will roll off the production line in July 2023 and will enter operation in September 2023.
In June 2023, Fudi Battery established a joint venture with Huaihai Holding Group, which is famous for electric tricycles and electric scooters, and plans to build the world’s largest sodium-ion battery supplier.
In the first quarter of 2023, power battery manufacturer Contemporary Amperex Technology (CATL), with a global market share of 35%, surpassed BYD’s 16.2%, becoming the top two global power battery manufacturers.
FinDreams Powertrain
FinDreams Powertrain is responsible for the development and production of engines and powertrain-related parts such as transmissions, axles, electric vehicle platforms and plug-in hybrid systems.
FinDreams Technology
FinDreams Technology mainly develops and produces automotive electronics and chassis-related parts, which are used in passenger cars, commercial vehicles, and rail transportation. It has ten major products including vehicle thermal management, vehicle wiring harness, smart cockpit, advanced driver assistance system (ADAS), passive safety, braking system, suspension and exhaust, body control, steering system, and body accessories.
FinDreams Precision
FinDreams Precision, formerly known as FinDreams Molding, is mainly engaged in plastic molding manufacturing and research and development.
Rail transportation
Sky track
In 2016, BYD launched a monorail prototype called “Sky Rail” and announced that it would enter the global rail transportation market. The first 9.7-kilometer-long public Skyrail line developed by the company was put into operation at the Yinchuan Flower Expo in 2018.
Skyrail Monorail
BYD has built monorail systems around the world, including China’s Guang’an Metro and Guilin Metro, Sao Paulo’s Line 17 and Brazil’s SkyRail Bahia. BYD has been awarded a pre-development contract for the Skyrail Monorail to build a monorail from the San Fernando Valley to Los Angeles International Airport via the Los Angeles Sepulveda Pass.
SkyShuttle tram
BYD also offers a rubber-tired tram product called “Yunba”. Chongqing Bishan rubber-tired tram was put into operation.
Operating performance
Financial figures
BYD’s revenue in 2022 will exceed RMB 420 billion, with net profit ranging from RMB 16 billion to RMB 17 billion, an annual increase of 425% to 458%.
In the first half of 2023, revenue increased by 72.72% year-on-year to 260.124 billion yuan, and net profit increased by 204.68% year-on-year to 10.954 billion yuan. In the first half of 2022, BYD’s net profit growth rate was also as high as 206.35%.
Revenue from the company’s largest division, the automobile business, increased by 91.11% year-on-year to 208.824 billion yuan, accounting for more than 80% of BYD’s total revenue. The interest rate also increased by 4.36 percentage points to 20.67%, which is far better than that of Continental Automobile. About 10% of the industry average.
Chinese market
JATO statistics show that between January and October 2023, BYD sold 1.92 million new cars, an increase of 58% from 1.21 million vehicles in the same period in 2022. This strong growth looks very solid compared to Volkswagen’s 1.75 million units (+0%) and Toyota’s (ticker:TM) 1.37 million units (-7%).
International market
Many automobile manufacturers, including Tesla, Toyota, and Volkswagen, use the North American market as the main pillar of world sales, but BYD focuses on European and Asian markets, including Germany, Japan, India, the United Kingdom, and Norway. But it can be said that it has no visibility in North America, which is BYD’s biggest long-term development disadvantage.
For Latin America, it will have 100 designated dealers in Brazil by the end of 2023.
Advantage and disadvantage
Advantage
Another key factor in BYD’s rapid growth is its broad product portfolio. It is the car brand with the largest number of electric models on the market. BYD’s RVs alone cover many grades, from small RVs to flagship RVs, with corresponding products. The current hottest SUV class in the world also includes many different small, compact and medium-sized models. Compared with Tesla, which currently has a limited product lineup, BYD’s extensive product series is another advantage factor over its global competitors.
BYD is the best-selling electric vehicle brand in Brazil, Israel, Malaysia, Singapore, Thailand and Vietnam. It ranks second in Australia and New Zealand. And these markets are more markets with different income capabilities, and this is also BYD’s real potential: not just a high-priced brand out of reach, it has the ability to build electric vehicles for the global market, which is in line with Tesla and other traditional automakers. products are different.
Disadvantages
Due to BYD’s rapid rise and strong dominance in the two major fields of global electric vehicles and power batteries, it has become so powerful that it threatens the European automobile industry and the supply of solar parts. In 2023, the European Union has included BYD on the list of formal investigations and begun a monopoly investigation.
In addition, based on geopolitical risks and the United States’ anti-China policy and decoupling from China in various fields, BYD may become another target of embargo, retaliation, or containment by the United States after Huawei.
Capital market performance
Buffett holds for the long term
How to discover BYD?
In 2003, Munger met Li Lu. Five years later, in 2008, Li Lu recommended BYD to Munger.
Munger strongly recommends
Buffett once half-jokingly admitted why he invested in BYD (please note: BYD does not look like an investment target that Buffett’s investment style would like) – “Because Charlie kidnapped me, held me captive, and forced me to take money from his pocket.” Find the money.”
According to industry legend, Munger and Buffett have been working together for more than 50 years and made a total of three recommendation calls to Buffett, the third of which was to invest in BYD.
When Munger promoted BYD, Buffett actually lacked interest, but he couldn’t bear Munger’s repeated advocacy, so he entrusted David Sokol, chairman of his wholly-owned energy company, to fly to China to inspect BYD.
Purchased 10% equity
Buffett met Wang Chuanfu for the last time, and in September 2008, Buffett decided to buy 25% of BYD’s shares, but Wang Chuanfu refused. He only agreed to sell no more than 10% of the shares. In the end, he invested US$230 million to buy BYD 10 % equity, a total of 225 million shares. This may also make Buffett start to trust this man who is unwilling to sell his company more. In September 2010, Buffett came to China and made a special trip to inspect BYD. During the event, the stock god made no secret of his love and favor for this company.
Buffett has always stood up for BYD at every shareholder meeting since 2008. In April 2020, due to the California epidemic, Buffett showed off his BYD masks (you read that right: BYD also produces masks): “I intend to live forever. So far, so good.” and handwritten “And my BYD masks are keeping me meet my goal! Thanks.” He really can’t hide his admiration for BYD.
Munger is proud of BYD
When Munger attended the Daily Journal’s annual shareholder meeting in 2023, he said that investing in BYD was the most successful case in his career, and said that BYD dwarfed Tesla in the Chinese market.
“I have never helped Berkshire (tickers: BRK.A and BRK.B) do anything as good as (investing in) BYD, and only one thing. Berkshire’s initial investment is now worth about 80 to 9 billion US dollars. This is a pretty good rate of return.” Munger said that no company’s return on investment can exceed BYD.
Return more than 33 times
Berkshire bought about 220 million shares of BYD for the first time in September 2008. Over the past decade or so, with the explosive growth of new energy vehicle sales, BYD’s stock price has risen by more than 600%. Last year, its market value once exceeded 10,000,000. billion yuan.
Berkshire Hathaway, run by Warren Buffett, subscribed for 225 million shares of BYD at a price of HK$8 per share in 2008. As BYD’s share price has grown, the return rate on some stocks has exceeded 33 times. After many years of holding, Berkshire Hathaway has Xia finally began to sell BYD one after another in August 2022. Hong Kong Stock Exchange documents show that Berkshire Hathaway’s current shareholding has dropped to 130 million shares or 11.87%.
Berkshire Hathaway’s Top 10 Holdings
List of Berkshire Hathaway’s top ten holdings. Among them, BYD, as the only Chinese company on the list, ranked eighth, with positions accounting for
The ratio reached 8.2%.
Start reducing holdings
In August 2022, Buffett reduced his holdings in BYD for the first time. Due to this news, BYD’s H shares in Hong Kong plummeted 13%. After multiple rounds of shareholding reductions, Berkshire’s stake in BYD has dropped to 7.98% by the end of 2023.
According to Buffett’s official answer to why he reduced his holdings in BYD, he only said: “To seek better arrangements for Berkshire Hathaway’s overall asset allocation.”
Munng highly praised
Very few companies he praised
Except Charlie. In addition to Munger’s personal holdings, Costco (ticker: COST), of which he has been a long-term director, plus Berkshire Hathaway and The Daily Journal, of which he is chairman, the company he most admires is none other than BYD.
Comments on Wang Chuanfu
Meng once said in an interview the year he passed away: Why do I never forget the founder of BYD? “This guy (referring to Wang Chuanfu) is a genius. He has a PhD in engineering. When he sees other people’s parts, he can make that part: look at it in the morning, look at it in the afternoon, and he can make it. I started from I have never seen anyone like him. He can do anything. He is a natural engineer, a production manager who can make everything happen.”
“This is a huge asset: it’s valuable to have so many talented people in one place. They solve all the problems of electric vehicles in terms of electric motors, acceleration, braking, etc.”
Comparison with Musk
Munger compared Wang Chuanfu to Musk: “Wang Chuanfu is a fanatic and knows how to make things with his own hands, so he is closer to the origin. In other words, BYD’s Wang Chuanfu is better at actually making things than Musk.”
Munger described BYD’s Wang Chuanfu this way: “He is simply a mixture of Edison and Jack Welsh; he can solve technical problems like Edison, and at the same time he can solve business management problems like Welch.”
Challenges
Market share, sales volume rise, stock price falls
In the fourth quarter of 2023, BYD shipped more than 520,000 pure electric vehicles, surpassing Tesla to become the global leader in electric vehicles. However, the performance of the capital market is opposite. In the past year, BYD’s share price fell by more than 26%, and its performance was far worse than that of its opponents.
Tesla’s cheapest model after subsidies is priced at about 230,000 yuan in China, while BYD’s cheapest model is less than 100,000 yuan. Low prices mean small profits but quick turnover. According to statistics from the “Wall Street Journal”, BYD’s gross profit margin in 2022 is less than 14%, while rival Tesla’s is more than 26%. This means that BYD’s profit from car sales is lower, while Tesla’s profit from each vehicle is The profit is almost three times that of BYD.
Geopolitics
The European Union Executive Commission will begin to intervene in the electric vehicle market with political power in 2023, inspecting Chinese automobile manufacturers to decide whether to impose punitive tariffs to protect European electric vehicle manufacturers. BYD, Geely Automobile, and Shanghai Automobile Group are targeted.
The market share of Chinese-made automobiles in the EU electric market has increased to 8%, and may reach 15% in 2025. The price of these electric vehicles is usually 20% lower than the EU-made models.
Soft power needs to be strengthened
BYD’s opponents are no longer those companies that emphasized hardware technologies such as battery and endurance in the past; investors prefer manufacturers with self-driving, automation, intelligence and software capabilities. BYD is relatively lagging behind in this regard. Not only is it no match for Tesla, competition now comes not only from established electric car manufacturers, but also from technology companies such as smartphone giant Huawei.
Profit margin is too low
BYD’s profit margin is too low, which is one of the main reasons why BYD’s stock price has been low for a long time. How low is BYD’s profit margin?
The average selling price of BYD’s bicycles in 2023 is 159,800 yuan, and it can only earn a net profit of about 8,600 yuan for each car sold. On the other hand, the average profit of a bicycle by the US manufacturer Tesla is close to 60,000 yuan.
Tesla’s gross profit margin hit a five-year low of 16.6% in December 2019. Tesla’s gross profit margin was 16.6% in 2019, 18.2% in 2023, 21.0% in 2020, 25.3% in 2021, and rose to 25.6% in 2022. Tesla’s gross profit margin in 2023 will be 26.2%.
In contrast, in the fiscal year ending December 2019 to 2023, BYD’s median gross profit margin was 16.8%; its gross profit margin hit a five-year low of 12.7% in December 2021.
BYD’s profits are undervalued, which is also reflected in the provision of depreciation. BYD deliberately tightened its financial recognition methods, resulting in a significant reduction in book profits. Moreover, BYD focuses on investment in research and development. In 2023, related expenses will increase by 97.39% annually, almost doubling, and will be nearly five times that of 2019.
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