Chinese automobile manufacturer BYD announced on Monday that it expects net profits in the first quarter of 2022 to total between 650 million yuan and 950 million yuan ($102M – $149.1M), up 174% – 300% year-on-year.
BYD’s production of new energy vehicles in March was 106,658 units, a year-on-year increase of 416.96%. The sales volume was 104,878 vehicles, up 422.97% year-on-year. From January to March, BYD sold 286,300 new energy vehicle vehicles, up 423% year-on-year.
BYD said in its announcement on Monday that in the first quarter of 2022, despite the adverse effects of a macroeconomic downturn in China, local pandemic breakouts and other factors, the new energy vehicle industry generally continued its rapid growth momentum. The sales volume of new energy vehicles of the company has reached a record high, which has greatly improved profits and offset pressure brought about by the rising price of upstream raw materials to a certain extent.
However, in the first quarter of this year, BYD’s smartphone components and assembly business were under a lot of pressure. Due to weak demand in the industry, the company’s capacity utilization rate was low, and the profit of the business sector was also squeezed.
Recently, BYD is changing various internal business segments, among which the most typical measure is to completely suspend the production of fuel vehicles. BYD has thus become the first traditional car company in the industry to completely stop production of fuel vehicles.
At present, affected by the rising prices of upstream raw materials, the prices of power batteries generally rise, which brings greater cost pressure to car companies. In addition, a global chip shortage continues to affect the production capacity of many enterprises. Coupled with the recent pandemic situation in many places in China, some core component enterprises have stopped production, logistics have been blocked, and even short-term supply has been cut off.
Under these conditions, BYD’s supply chain advantages began to stand out. Ye Shengji, Chief Engineer and Deputy Secretary General of China Association of Automobile Manufacturers (CAAM), said in an interview with Securities Daily that BYD has laid out across the power battery industry, and also has independently developed semiconductors, which has obvious advantages in terms of supply chains for the new energy vehicle industry. This can help the company balance prices through its own supply chain layout while the price of raw materials keeps rising.