BYD, the world's largest manufacturer of electric vehicles, has seen slowed sales growth due to aggressive price cuts on its cars, the lowest in the first quarter in four years. This strategy also led to pressure on profit margins, although the automaker’s gross profit margin (GPM) has increased both year-over-year and sequentially.

The Gross Profit Margin Rose in the First Quarter to 21.9% from 21.2% in the Fourth Quarter and from 17.9% in the Previous Year. This Trend Highlights BYD's Ability to Compete in a Fiercely Competitive Market, where Rivals such as Tesla and Li Auto Engage in Aggressive Price Wars in China's Extensive EV Market. Despite Increased Sales Volumes, Profit per Vehicle was Impacted by Lower Prices and Higher Expenditures for Sales and Research and Development. According to Analysts from Jefferies, Profit per Car Fell by 21% Compared to the Previous Quarter.

The analysts from Citi and Goldman Sachs emphasize that BYD's cost control and efficient scaling of production have significantly contributed to margin improvement. The margins in the passenger vehicle segment, which makes up the largest part of the revenue, were particularly impressive at 28.1%. This number is expected to rise further in the next quarter.

Thanks to its leading sales figures and lower battery costs, BYD has held the title of the world's largest EV seller since last year. This position allows the company to negotiate more effectively with its supply chain and reduce the relative costs of goods sold.

After a subdued start to the year, BYD has recovered and delivered 626,263 vehicles in the first quarter, more than any other EV manufacturer in China. If BYD can maintain its monthly deliveries at the level of March, when it delivered over 300,000 vehicles, its margin situation should continue to be enviable, according to analysts.

BYD announced on Wednesday that it sold 313,245 cars in April, an increase of 49% over the previous year.