- BYD just posted its first profit decline since 2021, and the real story isn't the 19% drop — it's the brutal price war at home that even $116 billion in revenue can't paper over.
- Domestic sales cratered 36% in early 2026, which means the company that dethroned Tesla twice is now bleeding out in its own backyard.
- BYD's survival plan hinges almost entirely on overseas expansion to 1.3 million units, but with the US market locked behind a tariff wall, the math gets very tight very fast.
- If you think Chinese automakers are unstoppable juggernauts immune to market gravity, this story will change your mind.
Although BYD posted record revenues in 2025, the figures come with a bit of a caveat. The $116 billion in reported income represents a 3.5% increase compared to 2024, but net profit fell by 19%. It’s the first time the Chinese company’s profits have dropped since 2021.
BYD has had a solid few years. After dominating the Chinese market it made large headways in Europe, causing issues for established manufacturers like Volkswagen in the process. It also overtook Tesla as the world’s biggest EV manufacturer for the second time in 2025, and is even exporting vehicles to Canada now.
However, reports from early 2026 indicate the company is struggling to shift vehicles in the same numbers it used to domestically. BYD reports its sales in China dropped to 400,241 units over January and February 2026. This represents a 36% drop year over year.
Even though the Chinese juggernaut seems to be expanding rapidly across most continents, it seems to be facing a fair few issues. It’s currently engaged in a domestic price war against other Chinese OEMs, which cuts into profits pretty deeply. Chinese government subsidies, along with subsidies in a few of the export markets BYD operates in, have also taken a hit. Further squeezing the company financially.
How is BYD planning on halting the decline
Currently, BYD is attempting to nip the current profit squeeze in the bud, but it isn’t planning to do so on Chinese soil. The company is targeting 1.3 million overseas sales in 2026, which would help offset any damage done by problems in the Chinese market.
Although it is mainly known outside of China for its dirt cheap EVs, the company is also hoping investments in cutting edge technology will help in the long term. BYD has pumped billions into battery production and manufacturing. It’s also looking into several emerging battery technologies including solid state and sodium-ion. It opened its first sodium-ion battery manufacturing plant in 2024.
As mentioned, BYD has a very strong presence in Europe and is pushing into Canada. However, the extremely lucrative US market is essentially closed off to it and all other Chinese companies due to the extensive tariffs placed on Chinese vehicle imports.
With that being said, attitudes are changing. Ford, one of the main proponents of American automotive protectionism over the past few decades produces vehicles in China. The Detroit-based company has also discussed the benefits of further partnerships with Chinese automotive companies.
This whole situation proves one thing though. Even those huge, ever-expanding, Chinese car makers we keep hearing about aren’t immune to taking a hit in the current climate.
