BYD Profit Falls 30% as Chip, Lithium Shortages Increase Costs
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BYD Co., the Chinese electric-vehicle and battery maker backed by Warren Buffett, said first-half earnings fell as shortages of chips and lithium increased costs.
Net profit fell 30% to 1.17 billion yuan ($180 million), the Shenzhen-based company said in a statement Aug. 27. Revenue rose 54% to 89.1 billion yuan.
BYD’s auto division, which contributed 43% of revenue, was hit by the global chip shortage, which has hobbled car-making giants from Volkswagen AG to Toyota Motor Corp. The resulting bottleneck threatens to cut worldwide auto production by as many as 7.1 million vehicles this year, according to IHS Markit.
BYD electric vehicle by BYD.
“Overall profitability is affected to some extent by factors including rising prices of raw materials, such as bulk commodities,” BYD said.
Founded in 1995, BYD has grown into one of China’s largest EV and battery producers, riding a wave of demand for cleaner-energy vehicles stimulated by government plans to reduce carbon emissions. The company sold 246,689 cars in the six months through June, with more than half of them hybrid or pure-electric vehicles.
Having taken an early lead in the sales of such vehicles, BYD now faces intensified competition from foreign rivals like VW and Tesla Inc., as well as Chinese competitors including Nio Inc. and SAIC Motor Corp.
BYD’s market share of China’s alternative-energy vehicle market rose to 16% in June, the company said, citing data from the China Association of Automobile Manufacturers.
Surging demand and tighter supply has pushed up prices of raw materials used in batteries, particularly lithium. Fitch Solutions said in May that the price of lithium will keep rising this year and next.
— With assistance from Yueqi Yang.
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