Chinese auto giant BYD posted lower net profit and revenue in the third quarter as intense competition and regulatory pressure hurt sales in its home market.

Net profit dropped 33% from a year earlier to 7.82 billion yuan, equivalent to $1.10 billion, the electric-vehicle maker said Thursday. Analysts had expected 9.02 billion yuan, according to a Visible Alpha consensus.

Quarterly revenue fell 3.05% to 194.98 billion yuan, below market expectations of 215.30 billion yuan.

The disappointing earnings highlight the challenges the automaker faces as it seeks to become a company recognized for its high-quality brand rather than one known for low-cost EVs.

BYD has looked abroad for growth amid pressure from Beijing to halt a price war in the world’s largest auto market. Softening domestic demand is another bump in the road. Its sales declined 2.1% in the third quarter, falling for the first time since 2020.

Analysts have expressed some optimism, however, saying that the EV maker might hit a trough soon and see stronger earnings in the fourth quarter.

For the first nine months, net profit fell to 23.33 billion yuan from 25.24 billion yuan, while revenue rose to 566.27 billion yuan from 502.25 billion yuan, the automaker said.

There are signs that its aggressive expansion overseas is starting to pay off. New-car registrations for BYD models in Europe almost quintupled to 24,963 units in September, according to the European Automobile Manufacturers’ Association.

BYD is also pushing to build its presence elsewhere. On Wednesday, it unveiled a battery-powered mini kei car designed specifically for Japan, signaling its determination to gain a foothold in a growing EV market dominated by domestic manufacturers and hybrid vehicles.

The Chinese EV leader has also been sharpening its autonomous-driving tech as it looks to expand into the premium-car market. BYD’s research-and-development expenses rose 31% to 43.75 billion yuan for the first nine months of the year, which the automaker attributed to higher employee compensation and material consumption.