Overall, $BYD(002594.SZ) delivered another solid performance in the third quarter, with the gross margin of its core automotive business (including battery operations) rising by 3.2 percentage points quarter-over-quarter to 25.6%, once again exceeding market expectations.

The sequential improvement in automotive gross margin was primarily driven by:

① Volume ramp-up of DMI 5.0 models (Qin L/Seal 06) starting in Q3, lifting average selling prices (ASP): The plug-in hybrid flagship models shifted from Honor Edition Qin Plus/Corvette 05 to DMI 5.0-based Qin L/Seal 06, which are priced ¥14k-20k higher.

② Scale effects from strong sales in Q3 further reduced per-unit depreciation costs, lowering overall unit costs - consistent with Dolphin Research's earlier analysis.

Regarding net profit per vehicle (a key investor focus), Q3 reached ¥9.3k, slightly below the consensus estimate of ¥9.6k due to larger-than-expected sequential growth in BYD's operating expenses.

R&D spending surged by approximately ¥4.7 billion to a record high. Dolphin Research attributes this to: ① Preparations for premium model launches (e.g., DENZA's debut Yi-Sanfang platform); ② Accelerated intelligent driving investments (BYD plans mass production of its in-house advanced ADAS system in November) - a justifiable expenditure.

Notably, while capital expenditures remained low, $BYD COMPANY(01211.HK) accelerated the transfer of construction-in-progress to fixed assets (dropping ¥25.7 billion QoQ to ¥17.6 billion), causing fixed asset value to rise (up ¥33 billion to ¥263 billion). This may raise concerns about higher Q4 depreciation impacting profit margins - Dolphin Research will provide preliminary estimates in subsequent commentary.