At a rate of 400%, the car industry has found its next meteorite: BYD

BYD is living the sweetest moment of his story. The Chinese “new energy” vehicle company, which in China means plug-in hybrids and electric cars, is breaking record after record in its growth. His latest milestone, net profits above 400%.

This manufacturer of electric cars, supported so far by Warren Buffet, managed to become the company that sold the most cars in China last quarter. The milestone is not minor because for 15 years, the same as the data is published, Volkswagen had dominated the market with an iron fist.

To this news of first trimester, the income statements were soon added to it. Of these, one figure stands out above all: net profit grew by 411%. In total, more than 541 million euros were obtained, according to Bloomberg.

But not only that, BYD’s operating income grew by 80%. The figure of 120,200 million yuan was reached, more than 17,375 million euros. And, above all, its profit margin increased to 17.9%, 5.5% more than in the last comparison.

The latter is especially important Well, a good part of the Chinese industry (and of the foreigners that operate in the country) has been involved in a very hard war over the prices of electric cars. As a consequence, some firms are heading straight for bankruptcy.

In fact, this margin is expected to continue to increase in the coming months. Jack Shea, a market analyst, assured Bloomberg that the company will continue to improve this data, at the rate that it opens new factories in China and the prices of the raw materials used by electric cars stabilize.

A meteoric rise in a context of instability

BYD’s history is not found in cars. In 1995, this company was founded to satisfy the demand for batteries that Motorola, Nokia, LG or Siemens required. Years later, in 2003, launched its vehicle division, always supported by rechargeable battery vehicles. In other words, it was already born as a manufacturer of hybrid vehicles.

Little by little, their growth was evident and in 2010 they had a market share of 5% in car sales in China. In the middle of the last decade, however, the manufacturer was losing strength. But since 2021 it has achieved a meteoric rise that has led it to sell 2% of cars in March 2021 to more than 10% last quarter.

Much of the secret to this growth is found by BYD within its own structure as company. The company makes its entire automotive train, including the batteries or semiconductors used by its electric vehicles. In fact, if we open the hood of a BYD Atto 3, its entire interior is full of components signed by the famous three letters.

This control over the product has allowed it to reduce its fixed and variable costs while the rest of the industry suffered from the coronavirus pandemic, the semiconductor crisis and the Ukrainian War. To this is added that China has spent years taking positions in the technology that they exploit, with absolute control of the supply chain of raw materials for batteries.

In its last steps, BYD is determined to increase your presence in markets outside of China. In Europe, his bet has come with five cars, three of which we could already see and touch during his debut in Spain. The opening of a new battery factory is also being considered in our country.

To continue gaining market share, the company wants to exploit what its control over the production process gives it the most benefit: cars for all audiences but highly technological.

His product range it is very high In China, the last Shanghai Hall was flooded with novelties with up to seven novelties. They have managed to have a portfolio of products that goes from the very cheap BYD Seagull to the very high luxury SUV either authentic supercars.

All this contrasts with an industry that fears the passing of the months. Its manufacturers continue to deliver positive results quarter after quarter, but analysts and investors warn of dark clouds on the horizon. In many cases it is warned that car prices will fall in the second half of the year and this is not good news for manufacturers.

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