BYD Shares Plummet After 2024 Results: What’s Behind the Crash?

Investors Shocked as Profit Concerns Eclipse Stellar Growth

BYD, the Chinese electric vehicle powerhouse, has seen its shares take a dramatic hit, dropping 3.32% to 390 Hong Kong dollars, following the release of its much anticipated 2024 annual results. Despite delivering a robust 34% surge in net profit to $40.25 billion and a 29% revenue leap to $777.10 billion, exceeding the $100 billion mark for the first time, the market response has been anything but celebratory. Investors appear rattled by the net profit per car, a critical metric that has sparked widespread concern despite aligning with overall expectations. This unexpected downturn has left analysts and shareholders alike scrambling to decode the underlying factors driving this sell off, raising questions about BYD’s long term profitability in an increasingly cutthroat electric vehicle market.

The annual financial report, unveiled late Monday, paints a picture of undeniable growth for BYD, cementing its status as a global leader in the electric vehicle industry. Revenue soared to $777.10 billion, translating to roughly $107 billion when adjusted to USD, while net profit climbed to $40.25 billion, buoyed by a record breaking 4.27 million new energy vehicle (NEV) sales in 2024. This figure reflects a staggering 41.26% increase from the 3.02 million units sold in 2023, with a breakdown of 1,764,992 battery electric vehicles (BEVs) and 2,485,378 plug in hybrid electric vehicles (PHEVs). Yet, beneath these headline grabbing numbers lies a thornier issue: the net profit per car, which Bernstein analysts pegged at $9,300 for 2024, up marginally from $8,500 in 2023. This modest uptick has failed to appease investors, who seem to have anticipated a more substantial jump in per unit profitability, especially given the company’s aggressive push for market dominance.

Digging Into the Net Profit Per Car Controversy

The spotlight on net profit per car reveals a complex narrative that goes beyond surface level growth metrics. While BYD’s total net profit soared, the per vehicle profit margin has emerged as a sticking point, suggesting that the company may be prioritizing volume over higher margins, a strategy that could signal vulnerability in the face of intensifying competition. Calculations based on total net profit and sales volume add a layer of intrigue, as they hint at a potential discrepancy in reported figures. For 2023, dividing the $30 billion net profit by 3.02 million NEVs yields an approximate $9,934 per car, higher than the $8,500 cited by analysts. For 2024, the $40.25 billion profit spread across 4.27 million units equates to roughly $9,426 per car, slightly down from the prior year’s calculated figure yet still shy of the $10,000 threshold some market watchers had hoped for. This gap suggests that analyst estimates might focus on specific vehicle categories, such as BEVs versus PHEVs, or exclude certain business segments, muddying the waters for investors seeking clarity on BYD’s profit trajectory.

Analysts from Bernstein and CCB International have weighed in, noting that the increase from $8,500 to $9,300 per car, while positive, falls short of signaling a robust margin expansion. CCB International further posited that BYD’s management appears content to stabilize net profit per car around $10,000, a stance that contrasts with market expectations of a sharper rise given the company’s sales momentum. This perceived reluctance to chase higher per unit profits may stem from the brutal price wars and competitive pressures within China’s electric vehicle sector, where smaller players are aggressively vying for market share. BYD’s own tactics, including year end discounts and promotional offers like free insurance on select models, likely fueled its December sales peak of 514,809 units but may have eroded profitability per vehicle, a trade off that has left shareholders uneasy about the sustainability of this growth model.

Market Sentiment and Competitive Landscape

The broader context of China’s electric vehicle market adds critical insight into why BYD shares dropped after the 2024 results despite meeting revenue and profit forecasts. The industry is in the throes of rapid evolution, with government backed trade in programs and escalating competition driving both sales and margin compression. BYD’s record breaking 41.26% sales growth underscores its ability to capture demand, but the modest net profit per car increase suggests that this success comes at a cost. Investors may fear that the company’s focus on volume, while effective in boosting its global standing, could expose it to risks if competitors continue slashing prices or if demand softens in key markets. The fourth quarter’s sales surge, while a triumph, likely relied on aggressive pricing strategies that kept per unit profits in check, amplifying concerns about future earnings potential.

Globally, BYD has made significant strides, with overseas sales soaring 71.86% to 417,204 units in 2024, propelled by bold expansions into markets like the UK, where sales skyrocketed by 658%. This international push highlights the company’s ambition to rival giants like Tesla, which it outpaced in total NEV sales for the year. However, challenges loom large, particularly in Western markets where regulatory hurdles, tariffs, and the need for costly post import adjustments have hampered penetration. These obstacles, coupled with domestic competition, paint a picture of a company at a crossroads, balancing explosive growth with the delicate task of maintaining profitability in an unpredictable landscape.

Financial Metrics: A Closer Look

To provide a comprehensive view of BYD’s performance, the following table compares key financial metrics for 2023 and 2024, shedding light on the interplay between revenue, profit, and sales volume:

Metric	2023 ($ Million)	2024 ($ Million)	% Change
Revenue	602,315	777,102	29.0%
Net Profit	30,000	40,254	34.2%
NEV Sales (Million)	3.02	4.27	41.26%
Net Profit per NEV ($)	~9,934	~9,426	-5.1%

These figures reveal a stark contrast: while revenue and net profit soared, the net profit per NEV actually declined slightly when calculated directly, highlighting the tension between scale and profitability. This discrepancy with analyst reported figures ($8,500 to $9,300) suggests differing methodologies, possibly tied to segment specific data or adjustments for non vehicle revenue streams, further complicating the investor outlook.

What’s Next for BYD and Its Investors?

The sharp decline in BYD shares after the 2024 annual results reflects a market grappling with mixed signals: blockbuster sales and revenue growth tempered by lingering doubts about per unit profitability. The company’s strategy of leaning into volume to solidify its position as a top electric vehicle manufacturer has paid off in terms of market share, but the muted net profit per car increase has sparked fears of margin erosion in a fiercely competitive arena. Investors appear to be weighing whether BYD can pivot toward higher margins without sacrificing its hard won sales momentum, especially as global expansion brings both opportunities and regulatory headaches.

Adding to the narrative, BYD’s overseas triumphs, while impressive, come with caveats. The 71.86% surge in international sales showcases its growing appeal, yet profitability in these markets remains uncertain amid trade barriers and adaptation costs. Back home, the company’s reliance on discounts to drive year end sales underscores the pressure to maintain volume, a tactic that may not bode well for long term margin stability. As the electric vehicle industry continues to evolve, BYD’s ability to navigate these challenges, balancing growth with profitability, will likely determine whether this share price dip is a temporary blip or a harbinger of tougher times ahead. For now, the market’s reaction serves as a stark reminder that even stellar headline numbers can’t fully shield a company from the scrutiny of its underlying metrics.

Key Citations

• BYD Company Limited Earnings Calendar and Analyst Expectations
• BYD Reports Record Q4 Net Income as NEV Sales Soar
• BYD Co Ltd-H Earnings Dates & Reports
• BYD Sold Record-Breaking 4.3 Million Vehicles in 2024
• BYD’s Overseas Sales Surged to New Record
• BYD UK’s Remarkable Growth in 2024: A Market Disruptor
• Why Does BYD Struggle to Penetrate Western Markets?