Gross Margin Defies Trend to Hit Record High, What "Hard Goods" Are Hidden in BYD's Semi-Annual Report?

On the evening of August 28, BYD released its performance report for the first half of 2026. Against the backdrop of price wars in the automotive industry where profits of many car companies were being "squeezed thin", this financial report sends a somewhat different signal: Operating revenue 344.8 billion yuan, net profit attributable to owners 12.3 billion yuan, R&D investment 28.9 billion yuan, cash reserves 167.4 billion yuan.

A more noteworthy set of data is: Net profit in the second quarter grew by 30% year-on-year, gross margin rose to 18.9%, hitting a new high in nearly a year. In other words, in the first half of the year when the industry was generally under pressure, BYD's ability to make money became stronger. Where does the confidence of this "growth against the trend" come from?

Overseas sales surged by 68%, high-end model proportion rose to 12.6%

Let's look at the change in growth structure. In the past, when mentioning BYD, many people thought of "volume". But from this semi-annual report, overseas markets and high-end brands are becoming increasingly important growth engines. In the first half of the year, BYD's overseas sales reached 790,000 units, a 68% year-on-year increase, with business covering over 120 countries and regions. In core markets such as the UK, Brazil, and Thailand, BYD took the sales champion of new energy vehicle brands. With the continuous release of overseas local production capacity and the gradual improvement of the channel system, the overseas sector has changed from "icing on the cake" to "solid pulling power". Meanwhile, high-end strategy is accelerating. The three brands Fangchengbao, Denza, and Yangwang combined sales of 228,000 units in the first half of the year, a 61% year-on-year increase, with the proportion of total sales rising to 12.6%. Among them, Fangchengbao sales reached 160,000 units, a 163% year-on-year increase; Denza's single-month sales in June exceeded 20,000 units for the first time, with an average product price of about 360,000 yuan; Yangwang became the brand with the fastest sales exceeding 10,000 units among domestic new energy million-level luxury cars. On one hand, the overseas market opens up space, on the other hand, high-end products raise the unit price. These two lines jointly promoted the optimization of BYD's product structure, and was directly reflected in the gross margin—the 18.9% gross margin in the second quarter is a quantitative embodiment of this trend.

There is another detail worth noting in the financial report: The growth rate of net profit in the first half of the year was relatively moderate, mainly because exchange rate fluctuations resulted in exchange losses. If this factor is excluded, the profitability of the main business remains stable, and the resilience of the operating foundation has not been shaken.

28.9 billion yuan in R&D investment, more than double the net profit

More "generous" than profits is BYD's spending power on R&D. In the first half of the year, BYD's R&D investment was 28.9 billion yuan, more than double the net profit for the same period, continuing to hold the title of "King of R&D" on the A-share market. Cumulative R&D investment has broken through 270 billion yuan. What did such high investment bring about? In March this year, BYD released the second-generation Blade Battery and flash charging technology, setting a record for the fastest charging speed in global mass production, solving the two major problems of "slow charging" and "difficult charging in low temperatures", and obtained the recognition of the Ministry of Industry and Information Technology. Technology landing is also accelerating: Relying on the "Flash Charge China" strategy, 10,000 flash charging stations have been built nationwide, covering 332 cities, and it is planned to deploy 6,000 flash charging stations overseas within a year.

In terms of intelligence, BYD took the lead in May to promise to underwrite urban navigation safety, plus previously underwriting intelligent parking safety, becoming the world's only "double underwriting" enterprise. As of July 31, the volume of BYD assisted driving models exceeded 3.52 million units, with "God's Eyes" generating over 220 million km of data daily. The released Xuanji A3 chip released during the same period is China's first self-developed 4nm process smart driving chip—from underlying chips to system software, BYD's "vertical integration" in the smart driving field is becoming visible product power.

Taxed 22.3 billion yuan, carbon emission reduction 23.17 million tons, another side behind the financial report

Beyond financial data, this semi-annual report also disclosed two numbers that are easily overlooked.

One is taxation. BYD's domestic tax total in the first half of the year was 22.3 billion yuan, far exceeding the net profit for the same period. This comparison placed in the current environment is heavy.

Another is carbon reduction. From January to June, BYD new energy vehicles lifecycle carbon emission reduction reached 23.17 million tons, equivalent to planting 386 million trees. Under the goal of "achieving carbon neutrality throughout the value chain by 2045", ESG performance remains firmly in the first echelon of domestic enterprises.

Panda Review: A sample of "structural upgrade" to traverse the cycle

In the first half of 2026, what is truly worth attention in this semi-annual report is not the rise or fall of a single item data, but the systematic improvement of growth quality. When the industry enters the stage of "good enough" from "whether available", the way of simply competing on sales and scale is becoming increasingly difficult. BYD's response idea is very clear: Use R&D investment to exchange for technical barriers, use technical barriers to support high-end strategy, use high-end strategy to improve profit structure, and then use overseas markets to open up incremental space. This is a chain of linked paths, rather than short-term prosperity supported by a certain hit model. The significance of the gross margin setting a new high in nearly a year also lies here—it indicates that BYD's improvement in profitability is not an accidental "quarterly fluctuation", but a trend change brought by structural optimization. In the current global automotive industry accelerating reconstruction, BYD provides a realistic sample of "traversing the cycle": When others consume profits in price wars, it chooses to invest profits in farther places. This may be the signal worth reading out in the semi-annual report most.