BYD expects its total 2019 profit to fall 43 per cent after the Chinese government’s cut in subsidies led to a drop in sales of electric cars and plug-in hybrids.
In the third quarter, BYD’s sales were down 9.17 per cent and profit 88.6 per cent, according to preliminary quarterly results. Sales were still at 31.64 billion yuan (about four billion euros), with net profits remaining at 119.72 million yuan (15.26 million euros) after over 1.2 billion yuan in the year-ago quarter.
In total, BYD sold 107,723 vehicles in the third quarter, 15 per cent fewer than in the same quarter last year. “As subsidies on new energy vehicles drop sharply, sales of new energy vehicles are falling short of expectations,” BYD writes in an announcement to the stock exchange. “It is expected that the profit of the company’s new energy vehicle business will also decline to a certain extent compared with the same period of last year”.
BYD’s profit expectation for 2019 as a whole in the announcement was a range of 1.58 to 1.77 billion yuan, equivalent to 201 to 225 million euros. In 2018 the profit was still 2.78 billion yuan.
However, BYD is not only suffering from the cut in subsidies (in September alone, NEV sales fell by 34 per cent), but also from new competition: Tesla is now accepting orders for Model 3 manufactured in the Gigafactory 3. Tesla is able to offer the vehicles from Chinese production at significantly better prices and in larger quantities and are thus in competition with BYD models, which were much cheaper than the imported Tesla models.
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