$BYD(002594.SZ)BYD announced its Q2 2025 earnings report, showing revenue of 200.92 billion yuan, up 14% YoY and 17.9% QoQ. However, net profit was only 6.36 billion yuan, down 29.9% YoY and 30.6% QoQ, marking BYD's first quarterly profit decline since 2022, significantly below market expectations.

For the first half of the year, BYD's revenue was 371.3 billion yuan, up 23.3% YoY; net profit attributable to shareholders was 15.5 billion yuan, up 13.8%. Gross margin fell from 18.78% to 18.01% YoY, indicating significant profitability pressure.

BYD's profitability decline is reflected in multiple aspects. Per-vehicle profit plummeted from 8,800 yuan in Q1 to 4,800 yuan in Q2, nearly halving to the lowest level since Q1 2022. Automotive gross margin also dropped sharply from 24% in Q1 to 18.7% in Q2, down 5.3 percentage points QoQ.

The profit decline stems from multiple factors: intense domestic competition, price cuts since late April, and rebates for most vehicles in H1, directly squeezing margins. Additionally, the "Vision of the Gods" advanced smart driving system increased per-vehicle costs but failed to boost sales enough to offset the added expenses. Per-vehicle costs rose by 10,000 yuan QoQ to 112,000 yuan in Q2, a key factor in the margin decline.

However, BYD's overseas performance was strong, with H1 sales up 128.25% YoY to 464,300 units, becoming a major growth driver. As of July, its NEVs entered over 112 countries/regions, ranking first in many markets. In Europe, new registrations surged 3x YoY, consistently outperforming TSLA.

BYD continues heavy R&D investment, with Q2 spending up 1.2 billion yuan QoQ to 15.4 billion yuan. H1 R&D totaled 30.9 billion yuan, up 53% YoY—double its net profit. Whether this investment will pay off and drive a H2 recovery remains to be seen.