BYD reports huge quarterly jump in profits as China sales rise after Tesla

Oct 18 (Reuters) – BYD Corporation (002594.SZ)China’s largest electric car maker said third-quarter net profit likely more than quadrupled as it continued to outperform Tesla Inc. (TSLA.O) In the largest car market in the world. Shares in BYD jumped.

After dropping gasoline vehicles from its product mix this year, BYD, more than any other automaker, has been able to take advantage of a range of incentives for electric vehicles offered by China’s central government as well as local governments.

Strong sales and a wider product range than other electric vehicle competitors have allowed the company, which is 19% owned by Warren Buffett’s Berkshire Hathaway. (BRKa.N)to significantly reduce costs per vehicle.

The improved product mix by driving cars such as the Han luxury sedan also helped boost profits.

BYD estimated net profit for the July-September quarter at between 5.5 billion yuan and 5.9 billion yuan ($765 million to $820 million) — up 333% to 365% over the same period a year earlier.

Its Hong Kong-listed shares rose 6% Tuesday afternoon, giving the automaker a market capitalization of about $93 billion — not far from General Motors’ combined market values. (GM.N) The Ford Motor Company (FN). Its Shenzhen-listed shares rose 5%.

BYD’s combined sales of pure electric and hybrid vehicles increased 250% in the first nine months to 1.2 million units, outpacing an 110% increase in the electric vehicle segment overall.

By comparison, Tesla sold just over 318,000 electric cars in China during the first nine months of the year. Among the domestic electric vehicle competitors, XPeng Inc (9868.HK) and Nio Inc (9866.HK) – Both losers – over 98,500 and over 31,600 sold respectively.

BYD said the big jump in car sales has eased pressure from increases in raw material costs, although it raised prices for some models by as much as 6,000 yuan.

BYD’s strategy to produce batteries and some microchips internally has also helped it overcome supply chain bottlenecks and cost increases from inflation, analysts at Fitch Ratings note.

The China Association of Automobile Manufacturers has estimated that sales of electric cars in China will increase by about 56% this year to 5.5 million units – a market far larger than whole-car sales in most countries.

Electric vehicles are also expected to account for 20% of total vehicle sales in China this year, up from 13.6% in 2021, according to the industry association.

Some subsidies for electric vehicles are set to end this year although the government has extended the purchase tax exemption for electric vehicles until the end of 2023.

(dollar = 7.1993 Chinese yuan)

(Reporting by Zhang Yan and Brenda Goh) Editing by Edwina Gibbs

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