Net profit in the second quarter of this year at BYD, China's largest electric-vehicle maker, rose 30% from a year earlier. Analysts said the notable improvement in results, even as the company pushes low prices in global markets, reflects the impact of in-house production and vertical integration of key components, including batteries.
◇ BYD rebounds in five quarters… overseas sales overtake domestic
According to BYD's first-half financial report released on the 29th, second-quarter net profit on a consolidation basis was 8.241 billion yuan (about 1.68 trillion won), up 29.6% from the same period last year (6.356 billion yuan). The company achieved a rebound in results for the first time in five quarters since the first quarter of last year (9.155 billion yuan).
The second-quarter profit margin was 18.9%, a record high for the past year. In China, it is assessed that BYD's profit per vehicle rose from 5,831 yuan in the first quarter to 7,600–8,728 yuan in the second quarter.
Exports led the rebound. Overseas sales in the second quarter were 471,091 vehicles, a surge of 82.4% from the same period last year (258,182). Reflecting this, accumulated first-half exports rose 67.8% to 792,000. As a result, first-half overseas revenue surpassed domestic revenue for the first time ever, at 181.268 billion yuan versus 163.547 billion yuan. The export share of total revenue also expanded to 52.6% from 36% a year earlier.
BYD's increase in overseas sales is seen as the result of a strategy to undercut competitors on price. In Korea, BYD sells the Sealion 6 DM-i, a midsize plug-in hybrid (PHEV) sport-utility vehicle (SUV), for 37.5 million won. Many imported PHEV SUVs top 80 million won. In Germany, the company is also upending the local ecosystem by launching the Dolphin small EV at about 3% less than Renault's Renault 5 E-Tech.
◇ Making parts in-house to control expense… criticism of "squeezing" suppliers
Although BYD sells cars at low prices overseas, it is seen as having a structure that still generates profit. Overseas selling prices are higher than China's domestic prices, where cutthroat competition is severe, so margins widen as export volumes increase. Operating eight of its own car carriers and establishing local plants to cut logistics costs also helped improve profitability.
The core of fundamental cost competitiveness is in-house component production and vertical integration. A BYD official said, "We achieved economies of scale through long-term research and development (R&D) of various parts and vertical integration of the manufacturing institutional sector," and noted, "We built a structure that can effectively control production expense amid external price volatility."
BYD develops and uses batteries itself, which account for a large share of an EV's price. They are "blade batteries," lithium iron phosphate (LFP) batteries formed in long, thin blade shapes. In fact, BYD started as a battery manufacturer before entering the complete vehicle business. In addition, BYD drastically reduced the number of components by integrating automotive battery cells directly into the pack without intermediate modules.
The company also unified its platforms as much as possible to two for EVs and three for hybrids. A BYD official said, "Platform standardization can reduce expense on the premise that it does not degrade core product performance through common parts and process optimization."
However, in China there is also criticism that BYD is securing profitability by "beating down" supply prices to partners. An executive at an auto parts company operating in China said, "To supply parts to BYD, you have to accept losses to get in," and added, "BYD is first selling a lot of cars worldwide to build recognition, then telling partners to share revenue later while forcing low prices."
◇ Cost competition heats up… Hyundai Motor: "we will cut the cost ratio by 3 percentage points by 2030"
Hyundai Motor Group has entered an emergency response mode to the low-price offensive by Chinese complete vehicle corporations including BYD. At the recent '2026 CEO Investor Day,' Hyundai Motor presented a mid- to long-term goal of achieving an operating margin of "9% or higher" by 2030.
To that end, it decided to cut the cost of sales ratio by an additional 3.0 percentage points (p) versus its existing plan. Hyundai Motor Group plans a full overhaul of its cost structure by linking ▲ vehicle life-cycle cost innovation (1.5%p) ▲ material cost reductions such as applying mid-nickel batteries (1.0%p) ▲ localization of production and parts (0.5%p).
An official at a complete vehicle company said, "To counter the price offensive of Chinese EVs, each complete vehicle corporation's top priority is shifting to boosting cost and price competitiveness," and added, "Some corporations are considering not only joint development with battery makers but also in-house production."