BYD, the world's largest electric-vehicle company, reported a 19% drop in annual earnings, reaching 32.6 billion yuan ($4.72 billion).

This figure is below the mean estimate of $39.894 billion by analysts polled by LSEG, despite a 3.5% increase in annual revenue, which reached 803.965 billion yuan (approximately $116.32 billion).

The company, which directly competes with Tesla, attributes this decrease to intense competition and price wars in the Chinese market.

The fierce competition in China's electric vehicle market, described by Chairman Wang Chuan-fu as a 'brutal knockout stage,' negatively impacted BYD's margins.

Net profit margins fell by 110 basis points year-over-year, reaching 4.1% in 2025.

This situation reflects the competitive pressure and price wars the company faces in its local market.

Despite the difficulties in the domestic market, BYD achieved growth in its international sales.

Approximately 38% of BYD's revenue came from outside China, an increase of almost 10 percentage points compared to 2024.

However, this growth was not enough to offset the decline in sales in China, where competition is increasingly intense.

BYD aims to sell 1.3 million vehicles outside of China this year, a key strategy given the decline in sales in its local market.

In the first two months of 2026, BYD's retail sales in China fell 55% compared to the previous year.

The company is focused on markets like Europe, where monthly registrations increased by 165%, and Canada, where it will benefit from reduced tariffs on Chinese electric vehicles.

BYD is investing in new technologies and models to boost its sales, including building a fast-charging network.

However, it faces tough competition from other electric vehicle manufacturers in China, such as Geely and Leapmotor, who are also launching new models with competitive prices.

BYD's performance in the first quarter of 2026 and its ability to adapt to market conditions will be crucial for its future success.