BYD, China's largest carmaker by sales, reported its first simultaneous decline in revenue and net profit for a half-year period since 2011, as the company pivots from aggressive price competition to a strategy focused on premium models and overseas expansion. In the first half of 2026, revenue fell 7.1% year-on-year to 344.8 billion yuan (about $48.6 billion), while net profit dropped 20.5% to 12.3 billion yuan (about $1.7 billion), according to the company's interim report as cited by Chinese outlet Huxiu.
The decline follows a net profit fall in 2025 and reflects the pressure of China's intensely competitive auto market, as well as the transitional costs of BYD's strategic shift. The company's cash and cash equivalents stood at 55.6 billion yuan (about $7.8 billion) at the end of June, roughly half the level a year earlier. Despite the squeeze, BYD has not halted its investment push: over the past five years it has spent more than 200 billion yuan (about $28.2 billion) on research and development, and capital expenditure has totaled over 555.7 billion yuan (about $78.3 billion).
In the first half, however, BYD reduced both R&D spending and capital expenditure compared with the same period last year, cutting R&D by 6.3 billion yuan (about $887 million) and capex by 35.8 billion yuan (about $5 billion). The company is shifting from a model of heavy infrastructure and full-stack self-development to a more focused and efficient approach, according to Huxiu.
Premium push
BYD's premiumization strategy has evolved from relying on sub-brands to directly upgrading its main sales channels. The company's Denza brand, launched in 2010 as a joint venture with Daimler, was the first step, followed by the Yangwang and Fangchengbao brands. But these premium sub-brands still account for less than 10% of BYD's total sales, so the company is now pushing its Dynasty and Ocean networks—which together have over 3,000 stores—to move upmarket.
In June, the Dynasty network launched the Tang EV flagship SUV, priced at around 300,000 yuan (about $42,300). The Ocean network introduced its 'Ocean 8 series' premium line, with the Seal 08 sedan and Sealion 08 SUV going on sale in July and September respectively. BYD has also introduced its second-generation blade battery and flash charging technology, which it claims can add enough range for a typical trip in five minutes and reach full charge in nine minutes, even at minus 30 degrees Celsius. The company aims to build 20,000 flash-charging stations by the end of the year.
As a result of these efforts, BYD's average revenue per vehicle rose by 11,000 yuan (about $1,550) in the first half compared with the second half of 2025, ending a decline that had persisted since 2023. The automotive gross margin improved to 22.3%, up nearly two percentage points year-on-year. However, the company has still had to offer discounts in some markets—one estimate put its promotional discounts at a record 10% in March—and the second-generation blade battery is still ramping up production, with output increasing by 20,000 to 30,000 units per month, according to Huxiu.
Overseas expansion
BYD's overseas business has become a key driver of its premium push. In the first half, overseas revenue accounted for more than 50% of total revenue for the first time, and the gross margin for overseas operations reached 21.7%, about six percentage points higher than domestic. According to industry data cited by Huxiu, the average selling price of BYD's overseas models is about 1.5 times that of domestic models.
The company's financial expenses surged by more than 8 billion yuan (about $1.1 billion) year-on-year due to exchange rate fluctuations, which contributed to the net profit decline. Despite the short-term pain, BYD's management, led by chairman Wang Chuanfu, has signaled that the premiumization and globalization push is just beginning, with the fruits expected to materialize in the coming years.
