BYD, the wolf has really arrived

Author|Eastland

Cover Image|Visual China

On March 25, 2026, BYD (SZ: 002594; HK: 01211) released its “2025 Annual Report.” According to the report, 2025 revenue was RMB 804 billion, up 3.5% year over year; attributable net profit was RMB 32.62 billion, down 19% year over year.

In 2025, BYD’s R&D spending reached RMB 63.4 billion. It rolled out, one after another, the “e-platform (maximum charging power 1MW),” the “5th-generation DM (depleted-state fuel consumption as low as 2.6L),” “God’s Eye (mass-market intelligent driving and parking as a fallback),” “Lingyuan onboard drone system,” “Cloud Levell-Z intelligent suspension system”……

Whenever BYD unveils breakthrough technologies, onlookers typically hold their breath and watch the market’s reaction, but the outcome often turns into a high opening followed by a decline. On March 5, 2026, BYD released the second-generation Blade Battery and fast-charging technology—this time, the wolf really is here.

The foundational logic behind “two legs, march together”

For a long time, BYD has adhered to “two legs, march together”—pure electric and plug-in hybrid.

Whether pure-electric beats plug-in hybrid, or plug-in hybrid beats pure electric, is the result of multiple factors stacking up, such as oil prices, charging piles without progress milestones, and even fluctuations in the price of battery-grade lithium carbonate (battery costs and competitiveness of pure-electric vehicles move inversely).

The shallow logic behind “two legs, march together” is “where the east is not bright, the west is bright.” This strategy has kept BYD continuously as the global sales leader in new energy vehicles.

Since 2021, the sales curves for pure electric and plug-in hybrid cars have looked like a “twist”:

In 2021, pure-electric and plug-in hybrid sales were 321,000 and 273,000 vehicles, respectively, for a total of 594,000 (excluding internal-combustion vehicles); they accounted for 54% and 46% of new-energy passenger vehicle sales, respectively, with pure electric leading by 8 percentage points;

In 2022, the situation reversed: pure-electric and plug-in hybrid sales were 911,000 and 946,000, respectively, for a total of 1.857 million (excluding internal-combustion vehicles); they accounted for 49.1% and 50.9% of new-energy passenger vehicle sales, respectively, with plug-in hybrid overtaking pure electric by a lead of 1.9 percentage points;

In 2023, the situation reversed again: pure-electric and plug-in hybrid sales were 1.575 million and 1.438 million, respectively; passenger vehicle sales totaled 3.012 million (internal-combustion vehicles had been discontinued), accounting for 52.3% and 47.7% of new-energy passenger vehicle sales, respectively, with pure electric leading by 4.5 percentage points;

In 2024, the situation reversed for the third time: plug-in hybrid vehicle sales reached 2.485 million, up 72.8% year over year, accounting for 58.5% of total sales—leading pure-electric vehicles by 16.9 percentage points;

In 2025, pure-electric and plug-in hybrid sales were 2.256 million and 2.289 million, respectively. Passenger vehicle sales totaled 4.545 million, with pure electric and plug-in hybrid splitting the market evenly;

In January and February 2026, pure-electric and plug-in hybrid sales were 2.256 million and 2.289 million, respectively, and 163,000 and 230,000. Plug-in hybrid led by 17.2 percentage points.

In the first two months of 2026, BYD’s sales fell sharply year over year. Among them, pure-electric vehicle sales dropped 35% and plug-in hybrid sales dropped 36.7%. Has “two legs, march together” failed? The author believes that the “second-generation Blade Battery and fast-charging technology” released on March 5, 2026 will have two aspects of impact on sales:

• Before the release

Potential buyers are holding cash and waiting to buy, with a widespread wait-and-see sentiment; this is an important reason behind the sharp sales drop in January and February 2026.

• After the release

Charging convenience improves, and range anxiety is significantly alleviated. Consumers who originally planned to buy a “plug-in hybrid” may have new options. But there are many countries/regions around the world that are not convenient for large-scale installation of charging piles, and there are plenty of old owners who still cherish the driving and riding experience of gasoline vehicles. In the coming years, plug-in hybrid cars may not necessarily sell worse than pure-electric cars.

The wise approach is not to overthink, and not to be anxious or uncertain—objective conditions plus consumer preferences determine which type of vehicle is more popular in a given country/region during a certain time period, and then you provide that type.

The foundational logic behind “two legs, march together” is “do good deeds, don’t ask about the future”—only focus on refining technology, solving pain points, and don’t bet/predict which will sell better: pure electric or plug-in hybrid.

Profitability crushes Tesla

Since 2023, BYD’s gross profit amount and gross margin on whole-vehicle sales have surpassed Tesla:

2023: BYD’s gross profit on whole-vehicle sales surged to RMB 101.6 billion, with a gross margin of 21%; Tesla’s gross profit on whole-vehicle sales fell back to RMB 94.3 billion, with a gross margin of 17.1%; “bit-by-bit” flipped to 108%;

2024: BYD’s whole-vehicle gross profit continued to rise, reaching RMB 137.7 billion, with a gross margin of 22.3%; Tesla’s whole-vehicle gross profit further fell to RMB 75.6 billion, with a gross margin of 14.6%; “bit-by-bit” reached 182%;

2025: BYD and Tesla’s whole-vehicle gross profit were RMB 132.9 billion and RMB 68.2 billion, respectively. BYD was down 3.5% year over year and Tesla down 10% year over year. BYD’s gross margin was 6 percentage points higher than Tesla’s; “bit-by-bit” expanded to 195%.

It is worth noting that Tesla’s hardware and software revenues are both included in whole-vehicle sales revenue—revenue related to FSD (Full Selp-Driveries) is reported as part of whole-vehicle sales. In 2025, FSD revenue of USD 956 million was recognized from deferred revenue, down 19.5% year over year. When Tesla’s whole-vehicle sales are added with “FSD, the uniquely money-making feature,” its gross profit is only half of BYD’s whole-vehicle sales gross profit!

Exporting 1 million vehicles is only the starting point

BYD’s biggest highlight in 2025, without a doubt, is its export business—full-year exports were 1.046 million vehicles, up 1.4 times year over year. Based on publicly available information, the top ten countries are:

Mexico 130,000; Brazil 120,000; Belgium 94,000; Indonesia 81,000; the UK 79,000; Australia 48,000; the UAE 47,000; Turkey 46,000; Spain 41,000; Uzbekistan 28,000. Among them, Germany had 23,000 vehicles and grew 700% year over year—it’s only a matter of time before it enters the top 10.

BYD’s overseas vehicle sales prices are far higher than those in China; for the same model, the price difference can be several times. In theory, exporting 1 million vehicles is equivalent to selling several million domestically. But in 2025, BYD’s profits did not rise—rather, they fell.

BYD does not separately disclose sales revenue for automobiles inside and outside the country, but BYD Electronics (HK: 00285) provides clues in its financial report. Taking 2025 as an example:

• Basis:

BYD Group’s overseas revenue was RMB 310.7 billion (including automobile and smartphone components businesses);

BYD Electronics’ overseas revenue was RMB 119.0 billion (mainly smartphone components business);

• Inference:

BYD automobile overseas revenue was RMB 191.7 billion (RMB 317.0 billion minus RMB 119.0 billion);

BYD automobile domestic revenue was RMB 456.9 billion (RMB 684.6 billion minus RMB 191.7 billion);

• Average selling prices:

BYD automobile domestic average selling price was RMB 128,000 per vehicle, while overseas average selling price was RMB 183,000 per vehicle;

BYD’s overseas expansion started with commercial vehicles (buses), whose unit price is far higher than that of passenger vehicles (sedans, SUVs). In the past two years, passenger vehicle exports have surged, pulling down the average overseas selling price.

BYD’s main export models are Yuan PLUS (Atto3), Dolphin, and Song PLUS. High-end models such as Han, Fangchengbao (Equation Leopard), Denza, and Yangwang are increasing their share.

Suppose the cost is 96,000, the selling price is 120,000, and the export price is 160,000 (profit of 40,000 per vehicle on exports), taxes and fees are 40,000 (about 25%), freight is 15,000 (about 10%), and channel partners take 32,000 (about 20%). The overseas terminal price would be close to 250,000. If profit increases by 40,000 per vehicle, wouldn’t exporting 1 million vehicles yield an extra profit of 40 billion?

Actually, not so. To open up a country’s automotive market, you first need to conduct market research—obtain access permits—set up local offices…… Building the sales/service network is a prerequisite for selling cars. Before you sell a single car, you might already spend several or tens of billions, and you still need to run ads, promotions, and so on……

Just like car manufacturing, car sales also have significant scale effects. Take Germany as an example: it already has 250 sales and service outlets, covering 90% of major cities. Selling 23,000 vehicles in 2025 means it is impossible to make big money.

BYD’s veteran overseas business executive, Liu Xueliang, once said: Overseas expansion is not from zero—it starts from negative territory. As of end-2025, BYD had entered six continents and 119 countries/regions. Of those, 99% had just crossed the “zero from negative to positive” point. With exports of 1 million vehicles, the top 10 countries account for 70% of volume. For the remaining 109 countries, each country only bears a few thousand vehicles, so it’s definitely fine for scalpers to make money with 180 vehicles or so. Following the regular import process and the path of building a sales/service network, reaching break-even would at least take 2 to 3 years.

One judgment is that exporting 1 million vehicles is only the starting point; if momentum continues, the overseas business will quickly cross the break-even point. “Prospects for money” are unlimited, and the high oil price will accelerate this process.

“Over-研发” or not

In 2022, BYD’s R&D spending chased up Tesla, and in 2025 it reached RMB 63.4 billion, equivalent to 192% of Tesla’s.

From 2014 to 2025, BYD’s total R&D spending over 12 years reached RMB 232.0 billion.

BYD’s R&D results are fruitful. Patent applications exceed 71,000, and 42,000 of them have been authorized.

BYD’s R&D efficiency is not the problem. But if it cannot effectively boost sales, then it is “over-research.”

Take 2025 as an example. BYD held many press conferences, ranging from mass-market intelligent driving to the Kilovolt platform and megawatt fast-charging, from hybrid technologies with fuel consumption as low as 2.6L per 100 kilometers to the onboard drone system (Lingyuan). There were also many signature events, such as announcing intelligent parking as a fallback, flat-tire stability for safe driving, a fishhook test result of 210 km, the rollout of the 15,000,000th new-energy vehicle, and a record on the Nürburgring-Nordschleife……

Somewhat bizarrely, launching so many new technologies did not create much of a stir, as if a mud cow fell into the sea. This contrasts sharply with how, the moment Xiaomi holds a press conference, large orders surge in like waves.

People who follow emerging automakers usually number only several million to several tens of millions, mainly urban white-collar workers. Once the eagerly awaited technologies are announced, they immediately spark heated discussion and strong sales within the target audience. But at the scale of BYD, Geely, and Chery, the audience for products and technologies far exceeds the elite group—there are so many people, many are not that “bothered” by new technologies, and they believe in “seeing is believing.” Once the press conference starts, those large orders of XX million are destined not to happen.

The mindset of competitors is complex yet interesting. They are “more discerning” than the general public. Their reactions to BYD’s new technologies are a chain of question marks—“Should we follow or not?” “Can we follow?” “What if we can’t keep up?”

In the industry, those who can’t stay patient throw out “useless theory,” or say, “I already had that.” Those who can stay patient patiently watch the market reaction…… When they see BYD’s sales not improving much, those who believe “the technology is useless” think they have won, and then mock BYD for “over-research.”

Actually, whether it’s new forces or BYD, the key for “breakthrough technologies” to be accepted is that users can clearly perceive them. For example, the megawatt fast-charging introduced in March 2025 was only tested on a few models such as the Tang L and Han L. For BYD to work out the charging/refueling support mode and communicate it with partners, most consumers have no opportunity to perceive the convenience of fast charging.

Take “flat tire stability at 140 km/h” as another example. For the vast majority of drivers, they may never encounter a flat tire on a highway in their entire lives, so they have no way to experience it. In addition, most people’s attitude toward safety is like pretending to care. When asked, they say “we care a lot,” “we care very, very much,” but how many passengers in the back seat wear seat belts? Seat belts can indeed save lives, and traffic laws clearly require them—yet many people still prefer to break the law rather than wear them. If public attitudes toward seat belts are like this, how can “flat tire stability” compete with the “big sofa” comfort?

But the new technologies are there, and eventually the target audience will recognize them. Over time, with “parking as a fallback” here and “ice-and-snow inner turning” there—day by day, accumulating little by little—BYD’s “cool tech” persona will slowly sink into people’s minds.

In short, it’s too early to declare BYD’s over-research. Let’s look at sales over the next one or two years.

The wolf is coming

The second-generation Blade Battery and fast-charging technology announced on March 5 are installed in almost all models covering all of BYD’s sub-brands, from below RMB 100,000 to above RMB 1 million.

• Highly perceivable

Charging speed is the easiest to be perceived. The press conference does not mention 5C or 10C. Instead, it directly promises the charging time: charging from 10% to 97% takes only 9 minutes; charging from 10% to 70% takes only 5 minutes.

Maybe some people think the difference between 9 minutes and 20 minutes is not that big. Assume a typical scenario—there are two service windows at a bank branch. Window A takes 9 minutes to process one transaction; window B takes 20 minutes to process one transaction. Suppose each window receives a customer every 10 minutes. Window A does not need a queue; when customers come, they are processed, and each customer’s service time is 9 minutes. Window B: the first customer takes 20 minutes, the second takes 30 minutes (including 10 minutes of waiting), the third takes 40 minutes, the fourth takes 50 minutes, the fifth takes 1 hour…… In reality, this would not happen; incoming customers would naturally choose the free window. But in scenarios where there are both fast-charging piles and non-fast-charging piles, car owners cannot choose the faster window the way bank customers can.

• Changing the business logic of charging

Fast-charging solutions change the investment, operation, and profitability models of charging infrastructure.

Take Tel-Electric (SZ: 300001) as an example: it operates 792,000 public charging piles, with a market share of 24%. In 2025 H1, charging volume was 8.5 billion kWh and it collected RMB 1.84 billion in service fees. For each pile per day, it charged 62.6 kWh and earned RMB 13.6. For a 60kW charging pile occupying one parking spot, theoretically it could charge 1,440 kWh per day (60X24), serving 60 pure-electric vehicles. But in reality, the actual charging volume was only 60 kWh, serving just one vehicle—efficiency and returns are extremely low. And it wastes a large amount of social resources.

By contrast, for gasoline cars (taking Beijing as an example), there are about 1,000 gas stations and 10,000 fuel dispensers, serving 5 million gasoline vehicles. If each car refuels once every 10 days and each dispenser serves 50 cars per day, then efficiency and returns are higher by 1 to 2 orders of magnitude than charging guns. To build a new gas station in Beijing is nearly impossible; acquiring an existing gas station often costs tens of millions of yuan.

Even if the fast-charging station’s efficiency reaches only half that of a gas station: a minimum unit (two parking spots and two dispensers, with 400 kWh energy storage) would serve 40 cars per day, charge 2,400 kWh, and generate service fee revenue of RMB 720. At night, “idle” charging for 400 kWh at off-peak prices of 0.3 yuan per kWh yields some revenue, and during the day it sells at 1 yuan per kWh, earning a spread of RMB 280. Revenue over 24 hours is RMB 1,000.

China has fewer than 100,000 gas stations and about 1 million fuel dispensers, basically meeting demand from 320 million gasoline vehicles.

As of end-June 2025, the country had 18 million charging piles—18 times the number of gasoline dispensers. Yet it still cannot eliminate range anxiety for 40 million new-energy vehicles. To promote new-energy vehicles, it still requires building charging piles at massive scale.

Actually, what constrains new-energy vehicle charging is not that there are too few charging piles, but that charging is too slow. With an average power of just 44kW across the existing 18 million charging piles, even without queuing, charging 60 kWh still takes one and a half hours.

One fast-charging pile can replace 10 normal piles, which can greatly reduce the number of newly built charging piles while also significantly improving the economic returns of building and operating charging infrastructure.

• A 10 GWh energy-storage network

Fast-charging stations come with energy-storage facilities with extremely large capacity and power for both charging and discharging, distributed across the country, leaving infinite room for imagination. By the end of 2026, 20,000 fast-charging stations will be built, with total energy storage capacity of about 10GkWh (among the 18,000 stations, each station-center unit has 400 kWh, and among the 2,000 standalone stations each has 1,000 kWh).

In the past, every time BYD released a new technology, the auto industry would reenact a “wolf is coming” scene. Now, the wolf really is here!

The above analysis is for reference only and does not constitute any investment advice!

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