--- title: "BYD's 'Overseas Expansion Story' Has Become a Profit Pillar: Overseas Markets Contribute ~70% of Auto Revenue, with Significantly Higher Per-Vehicle Profitability" type: "News" locale: "en" url: "https://longbridge.com/en/news/284482868.md" description: "Behind the halving of BYD's net profit in Q1, the real 'culprit' was approximately RMB 2 billion in foreign exchange losses, rather than operational deterioration. Excluding this disturbance, per-vehicle net profit rose against the trend to RMB 8,900, and gross margin improved by 140 basis points quarter-on-quarter. More critically, the weight of overseas business has further increased; overseas per-vehicle net profit is three times that of the domestic market. Overseas revenue accounted for about 70% of total vehicle revenue in Q1, with an expected full-year contribution of around 60%. JPMorgan judges that Q1 marks the profit trough of this cycle, with sales volume expected to surge 60% quarter-on-quarter in Q2" datetime: "2026-04-29T02:56:45.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/284482868.md) - [en](https://longbridge.com/en/news/284482868.md) - [zh-HK](https://longbridge.com/zh-HK/news/284482868.md) --- # BYD's 'Overseas Expansion Story' Has Become a Profit Pillar: Overseas Markets Contribute ~70% of Auto Revenue, with Significantly Higher Per-Vehicle Profitability BYD's profit structure is undergoing a systemic shift. Overseas business has evolved from an add-on to sales growth into a core pillar supporting overall profits—overseas revenue accounted for approximately 70% of total vehicle revenue in Q1, while overseas per-vehicle profitability is several times higher than domestically. BYD's net profit in Q1 was RMB 4.1 billion, a year-on-year decline of 55%. While the figure itself is concerning, the underlying cause points to a non-operational factor: approximately RMB 2 billion in foreign exchange losses. The appreciation of the Renminbi against the US dollar and the euro directly squeezed reported profits. According to Zhuifeng Trading Desk, Nick Lai, Head of Asia-Pacific Auto Research at JPMorgan, pointed out in his latest report that excluding foreign exchange disturbances, gross margin is actually improving. Q1 per-vehicle net profit was approximately RMB 8,900, which is not only higher than the RMB 6,800 in the same period last year but also basically flat with the RMB 8,800 in Q4 last year; **gross margin improved by 140 basis points quarter-on-quarter to 18.8%.** Jeff Chung, an analyst at Citibank, maintained a Buy rating after the release of the quarterly report. His calculations show that after adjusting for foreign exchange factors, **the per-vehicle net profit for new energy vehicles (NEVs) in the domestic market was approximately RMB 751, whereas the market had previously widely expected a per-vehicle net loss of RMB 1,000 to RMB 3,000.** JPMorgan's forward-looking judgment is even clearer: Q1 is the profit trough of this cycle. Starting in Q2, sales volume will accelerate, with an expected quarter-on-quarter growth of about 60%, significantly higher than the industry's seasonal average of 25%-30%; the importance of the overseas market will further increase\*\*, with overseas revenue already accounting for about 70% of total vehicle revenue in Q1, and expected to be around 60% for the full year.\*\* Based on these judgments, JPMorgan raised its target price for BYD's H-shares from HKD 110 to HKD 120, and its A-share target price from RMB 95 to RMB 120, maintaining an "Overweight" rating for both. Citibank maintained its target price of HKD 142. Supporting this upward revision logic are several short-term catalysts, including the accelerated deployment of flash charging networks, the gradual commencement of production at overseas factories, and the upcoming ADAS Technology Day. ## The True Picture of Q1: Per-Vehicle Profit Is Not Bad, Two Factors Dragged Down the Bottom Line Q1 revenue fell 12% year-on-year and 37% quarter-on-quarter to RMB 150.2 billion. Behind this was a 31% year-on-year and 47% quarter-on-quarter decline in sales volume to approximately 690,000 units. As Q1 is traditionally a slow season, this figure aligns with historical patterns. **Gross margin is actually improving. Q1 gross margin was 18.8%, an increase of 140 basis points from 17.4% in Q4 last year, indicating that BYD's cost control and product mix are moving in a positive direction.** Behind the overall data for Q1, there were two obvious irregular drags that need to be isolated. The first is foreign exchange losses. Q1 recorded foreign exchange losses of approximately RMB 2 billion, compared to foreign exchange gains of about RMB 1.9 billion in the same period last year. This comparison created a year-on-year pressure of nearly RMB 4 billion, which almost entirely explains the gap with market expectations. This factor lacks a systematic hedging mechanism, and its volatility will continue. The second is the sharp drop in profits at BYD Electronics (in which BYD holds approximately 65% equity), which plummeted from RMB 622 million in Q1 last year to RMB 27.8 million, creating an additional drag on the consolidated financial statements. The rise in expense ratios was also within expectations. The operating expense ratio expanded from 9.3% in Q4 to 13.6% in Q1, mainly because the dilution effect of R&D and administrative expenses was amplified after the revenue base declined. It is worth noting that BYD has historically tended to expense most of its R&D expenditures directly, rather than capitalizing them like some peers. This means its income statement inherently bears greater R&D pressure—in other words, the reported net profit reflects R&D investment more directly than its peers. ## Overseas: From "Selling Cars" to "Building an Ecosystem," the Profit Logic Has Changed The reshaping of BYD's valuation logic by overseas business is reflected not only in the revenue share but also in the fundamental difference in per-vehicle profit structure. **Citibank's calculations show that the per-vehicle net profit for exports in Q1 was approximately RMB 18,000; JPMorgan's forecast points to an overseas per-vehicle net profit of approximately RMB 20,000 by 2030, compared to about RMB 6,000 domestically during the same period—a gap of more than three times. Overseas revenue accounted for about 70% of total vehicle revenue in Q1, with an expected full-year contribution of around 60%, whereas this proportion was only about 40% in 2025. The rapid growth highlights the acceleration of this structural shift.** In terms of capacity layout, after the factories in Brazil, Indonesia, and Hungary commence production, BYD's annual production capacity outside China will exceed 800,000 units, with room for further expansion. JPMorgan pointed out that localized production has direct significance for avoiding tariff barriers and penetrating local supply chains. It is worth noting that depreciation and amortization per exported vehicle rose to RMB 11,200/unit in Q1, indicating that the fixed cost pressure brought by overseas capacity expansion is beginning to appear in the data. The layout of charging infrastructure further strengthens the moat of the overseas ecosystem. BYD plans to deploy 6,000 flash charging stations abroad by April 2027, with 3,000 in Europe and the rest covering ASEAN and emerging markets. Management revealed at the Beijing Auto Show that the payback period for investments in markets like Singapore is approximately 2 years. The domestic flash charging network is also accelerating—the target is to deploy 20,000 stations by 2026. As of April this year, over 5,000 have been deployed, achieving over 25% completion, ahead of the original schedule. ## Beijing Auto Show Boosts Domestic Confidence, Rising Oil Prices Create Macro Tailwinds Just before the report was released, Nick Lai completed field research at the Beijing Auto Show. He mentioned in the report that BYD unveiled two models featuring a new generation design language at the auto show: the Tang SUV and the Sea Lion 8 SUV. Both received "substantial pre-orders," which is the direct basis for JPMorgan becoming "more confident" in domestic sales momentum. The latest demand data disclosed by BYD alongside the quarterly report also corroborates this judgment: cumulative orders for the Song Ultra EV reached 61,000 units in its first month. The macro environment also provided support. Currently, rising oil prices naturally favor the ownership cost advantage of NEVs; as NEV prices have basically leveled with fuel vehicles, the switching threshold for consumers is lowering. This background, combined with field feedback from the Beijing Auto Show, constitutes the basis for raising Q2 sales volume expectations. ## Cash Flow and Depreciation: The Unresolved Question of Q2 Profit Elasticity The core variable for Q2 profit elasticity is a depreciation arithmetic problem. Citibank's scenario analysis shows that **under the assumption of Q2 sales volume of approximately 1.12 million units, if per-vehicle depreciation and amortization decreases by RMB 3,500 quarter-on-quarter, core net profit (excluding foreign exchange and BYD Electronics) could reach an upper limit of RMB 11.3 billion; if depreciation remains at Q1 levels, the baseline estimate is RMB 7.4 billion—a gap of nearly RMB 4 billion between the two extremes.** Capital expenditure in Q1 was RMB 22 billion, a year-on-year decrease of 41% and a quarter-on-quarter decrease of 47%. This direction is favorable for the long-term downward trend of depreciation, but there is a time lag between capital expenditure and depreciation. How much operating leverage can be realized in Q2 remains an open question. Pressure on the cash flow level is also worthy of attention. Free cash flow in Q1 was negative RMB 19.3 billion. Inventory increased by RMB 22 billion quarter-on-quarter, accounts receivable increased by RMB 7.2 billion, and accounts payable decreased by RMB 34 billion during the same period. These three indicators moving simultaneously towards financial pressure mean that BYD assumed the role of advancing funds to both upstream and downstream partners in Q1. Operating cash flow was only RMB 2.8 billion, a year-on-year decrease of 67%. If Q2 sales volume can effectively digest inventory, this pressure is expected to be partially alleviated; if inventory continues to accumulate, cash flow pressure will persist. Inflationary pressure on the cost side has not yet dissipated, and the lack of a systematic hedging mechanism for foreign exchange losses constitute risk variables that require continuous tracking throughout the year. ### Related Stocks - [002594.CN](https://longbridge.com/en/quote/002594.CN.md) - [01211.HK](https://longbridge.com/en/quote/01211.HK.md) - [BYDDF.US](https://longbridge.com/en/quote/BYDDF.US.md) - [BYDDY.US](https://longbridge.com/en/quote/BYDDY.US.md) - [JPM.US](https://longbridge.com/en/quote/JPM.US.md) - [C.US](https://longbridge.com/en/quote/C.US.md) - [00285.HK](https://longbridge.com/en/quote/00285.HK.md) - [HYDD.SG](https://longbridge.com/en/quote/HYDD.SG.md) - [81211.HK](https://longbridge.com/en/quote/81211.HK.md) - [JPM-M.US](https://longbridge.com/en/quote/JPM-M.US.md) - [JPM-C.US](https://longbridge.com/en/quote/JPM-C.US.md) - [JPM-D.US](https://longbridge.com/en/quote/JPM-D.US.md) - [JPM-L.US](https://longbridge.com/en/quote/JPM-L.US.md) - [8634.JP](https://longbridge.com/en/quote/8634.JP.md) - [JPM-K.US](https://longbridge.com/en/quote/JPM-K.US.md) - [JPM-J.US](https://longbridge.com/en/quote/JPM-J.US.md) - [C-R.US](https://longbridge.com/en/quote/C-R.US.md) ## Related News & Research - [BYD doubles down on fast charging to target China's EV holdouts](https://longbridge.com/en/news/284068565.md) - [BREAKINGVIEWS-BYD’s comeback plan requires new tool box](https://longbridge.com/en/news/284484976.md) - [BYD Strengthens Corporate Governance With New Nomination Committee Rules](https://longbridge.com/en/news/284375386.md) - [BYD Sets June Cut-Off Dates for AGM Voting and 2025 Final Dividend](https://longbridge.com/en/news/283633472.md) - [BYD Denza launches second-gen D9 with ultra-fast charging to defend MPV market share](https://longbridge.com/en/news/284300335.md)