BYD Company Limited recently released its 2025 interim report. In the first half of this year, the company achieved operating revenue of 371.281 billion yuan, a year-on-year increase of 23.30%, and net profit attributable to shareholders of 15.511 billion yuan, up 13.79% year-on-year. In the second quarter specifically, revenue reached 200.921 billion yuan, up 14.04% year-on-year, while net profit attributable to shareholders was 6.356 billion yuan, down 29.86% year-on-year.

Due to performance falling short of expectations, multiple domestic and foreign brokerages downgraded BYD's full-year profit forecasts following the interim report disclosure.

Notably, BYD successively launched new technologies including the "Eye of the Gods" driver assistance system and megawatt-level flash charging in the first half, putting them into commercial use, with R&D expenses surging over 50% year-on-year. However, gross margins continued to decline and sales showed signs of peaking, indicating that massive R&D investments and self-developed core technologies have yet to show effectiveness.

More importantly, sales of key models from BYD's mid-to-high-end brands including Denza, Fangchengbao, and Yangwang began showing weakness months ago, leading to a significant decline in overall per-vehicle profit in Q2, approaching a 50% drop.

After August sales figures were released, market rumors suggested that BYD internally revised its annual sales target from the original 5.5 million units down to 4.6 million units. Based on this estimate, BYD's overall sales are about to enter a downward inflection point, with declines of 10% expected from September through year-end. Going forward, BYD may face the severe challenge of simultaneous volume and price declines.

**Quarterly Net Profit Turns Negative for First Time in Three Years; R&D Spending Surges 50% While Gross Margin Continues Decline**

BYD's interim report shows that in the first half of this year, the company's operating revenue and net profit attributable to shareholders increased 23.30% and 13.79% year-on-year respectively, with automotive business accounting for approximately 81.5% of total revenue, maintaining both revenue and profit growth.

However, looking at quarterly performance, BYD's Q2 revenue grew 14.04% year-on-year while net profit attributable to shareholders declined 29.86% year-on-year, in sharp contrast to Q1's 100.4% surge. This marks the first quarterly profit decline for BYD in over three years, with the decline exceeding prior market expectations.

Notably, BYD launched multiple new technologies in the first half including the "Eye of the Gods" driver assistance system, Super e-Platform megawatt flash charging, and LingJia in-vehicle drone system, subsequently rolling out new models based on these technologies including the Xia, Qin L EV, Han L, Tang L, Seal 05 EV, and Seal 06 EV.

Simultaneously, the company's R&D expenses reached 30.88 billion yuan in the first half, a substantial 53.05% year-on-year increase, with R&D spending as a percentage of revenue rising to a recent high of 8.3%. Since 2022, R&D investment intensity has maintained continuous upward momentum.

However, due to intensified competition in the passenger vehicle industry and competitive pressures, BYD has continuously reduced prices on new models to maintain market share, causing the company's profitability to decline continuously.

In the first half, BYD's gross margin was 18.01%, down approximately 2 percentage points year-on-year, while Q2's single-quarter gross margin was 16.27%, down 3.8 percentage points sequentially, showing accelerating decline.

Furthermore, after sales growth of 33.04% in the first half, BYD's growth rates in July and August were both under 1%, showing stagnation for two consecutive months with clear signs of sales peaking.

Clearly, massive R&D investments have failed to reverse the decline in profitability and sales momentum, raising market doubts about the actual value of BYD's various self-developed core technologies.

**High-End Brands Cooling Significantly, Per-Vehicle Net Profit Nearly Halved; Sales Inflection Point Imminent with Potential Volume-Price Double Drop Challenge**

Fangchengbao, Denza, and Yangwang are key brands that BYD has focused on building to target mid-to-high-end markets. After experiencing a period of growth, sales from these major brands have successively shown weakness.

Statistics show that among BYD's mid-to-high-end brand models with longer market presence, the Denza D9, Fangchengbao Leopard 5, Fangchengbao Leopard 8, and Yangwang U8 have experienced consecutive month-on-month sales declines since March this year. Among these, the highest-end model Yangwang U8 has seen sales drop below 100 units since May.

Among new models launched this year, the Denza N9's sales peaked in the month following its launch, with July showing significantly expanded month-on-month declines.

Weak high-end model sales directly led to significant declines in BYD's profitability and per-vehicle profit.

In the first half of this year, BYD's automotive-related product revenue was 302.5 billion yuan, up 32% year-on-year, with a gross margin of 20.35%, down 3.59 percentage points year-on-year. Average selling price per vehicle was approximately 153,000 yuan, down 2% year-on-year, with gross profit per vehicle of approximately 29,000 yuan and net profit per vehicle of approximately 7,000 yuan, down 15% year-on-year.

In the second quarter specifically, average selling price per vehicle was approximately 155,000 yuan, gross profit per vehicle was approximately 26,000 yuan, and net profit per vehicle was only 5,000 yuan, with both year-on-year and sequential declines of approximately 40%, approaching a 50% drop.

Notably, after August sales figures were released, market rumors suggested that BYD internally revised its 2025 sales target from the original 5.5 million units down to 4.6 million units. This information has not yet received any official response from BYD.

In fact, in the first eight months of this year, BYD completed only 52% of its original 5.5 million unit sales target, and with sales having stagnated for two months, achieving the original annual target would be extremely difficult.

However, if calculated based on the rumored new target of 4.6 million units, BYD's cumulative sales from September to December this year would decline 10% year-on-year over these four months. This means BYD's overall sales have now entered an inflection point from growth to decline.

Under pressure from both sales volumes and selling prices, BYD may face an even more severe situation of simultaneous volume and price declines in the future.