BYD Overseas Revenue Share Surpasses Half for First Time, R&D Investment Declines | Brief Analysis of Semi-Annual Report

Cover | BYD

Author | Chen Zhuo

Editor | Han Yongchang

On August 29, BYD disclosed a semi-annual report that does not look very good.

In the first half of the year, BYD achieved operating revenue of 344.815 billion yuan, a year-on-year decrease of 7.13%; net profit attributable to the parent company was 12.325 billion yuan, a year-on-year decrease of 20.54%. Most major financial indicators were basically in a year-on-year decline state, and cash and cash equivalents on hand were only 55.619 billion yuan, a decrease of about half compared to the same period last year.

Such results are not actually surprising. In a market where 3.3 new cars launch daily, it is almost impossible for any automaker to submit a sufficiently pretty semi-annual report.

In the first half of this year, Li Auto turned from profit to loss with a net loss of 3.981 billion yuan; Xpeng had a net loss of 3.12 billion yuan. Even Leapmotor, which was in the spotlight in the first half of the year with monthly sales breaking 100,000 units and achieved a 530.97% year-on-year growth in net profit, only reached 208 million yuan.

Therefore, in such a market environment, simply analyzing the rise and fall of BYD's revenue, profit, and other financial indicators in the first half of the year does not have great significance. This is due to both reasons at the company's own operational level and the impact caused by changes in the market environment.

So, this short article does not intend to focus on the rise and fall of the numbers in the financial report, but rather wants to discuss two data points:

The first data point is that BYD's overseas revenue share exceeded half for the first time, reaching 52.57%; the second data point is that its R&D investment in the first half of the year saw its first year-on-year decline since 2020.

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Overseas Revenue Share 52.57%

Let's look at overseas revenue first. BYD's truly large-scale overseas expansion started after 2024.

In Q4 2024, BYD had consecutive months with sales exceeding 500,000 units, with domestic monthly sales exceeding 450,000 units, which is the peak monthly sales to date. In 2024, BYD also successfully sold 4.2 million new energy vehicles, and growth in the domestic market has hit the ceiling.

From this point on, BYD significantly accelerated overseas market expansion.

In 2025, BYD's annual overseas sales broke 1 million units for the first time, and the proportion of overseas revenue to total revenue increased from 28.55% in 2024 to 38.65%.

This year, this trend further accelerated.

In the first six months of 2026, BYD's total sales were 1.8085 million units, of which overseas sales reached 792,300 units and domestic sales were 1.0163 million units. That is to say, overseas sales have accounted for 43.8% of BYD's total sales.

What's more noteworthy is that the growth in overseas sales has started to reflect directly in the revenue. In the first half of this year, BYD's overseas revenue reached 181.268 billion yuan, accounting for 52.57% of total revenue.

This is the first time in BYD's history that overseas revenue share has exceeded half.

BYD is not just going overseas, but is becoming an automaker increasingly reliant on the overseas market.And the significance of the overseas market for BYD is not just providing incremental sales.

The financial report shows that in the first half of this year, BYD's overseas business gross margin reached 21.71%, while the domestic business gross margin was only 15.67%.

Combining BYD's domestic and overseas sales in the first half of this year, it can be roughly calculated that the gross profit per vehicle corresponding to overseas business is about 49,700 yuan, while domestic is about 25,200 yuan, the former is nearly twice the latter.

Of course, this number cannot be simply understood as "BYD earns 49,700 yuan for every car sold overseas". BYD's business structure is different from many automakers, and the profits of power batteries, energy storage, and other businesses are also included in the overall business, and there are also differences in product structures between domestic and foreign.

But at least one point is very clear: Overseas markets are not only a new source of sales growth for BYD or any Chinese automaker, but also a market with better profitability.

So, BYD is still continuing to accelerate overseas expansion.

The financial report shows that currently, BYD's new energy vehicle business has covered six continents and 121 countries/regions worldwide. In the first half of this year, in major overseas markets such as the UK, Italy, Spain, Brazil, Thailand, Indonesia, Saudi Arabia, and UAE, BYD was the new energy vehicle sales champion.

If BYD can maintain overseas sales growth in the future, while keeping overseas revenue above half of total revenue for a long time, then its identity will also undergo a significant change, it is no longer just China's largest new energy vehicle company, but will increasingly become a global automotive company.

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R&D Investment Down 6.54% YoY

R&D has always been one of the most important tags for BYD.

In the past few years, BYD has emphasized R&D investment almost every year. From the Tech Pool, to Engineer culture, to increasing R&D personnel and R&D expenses, R&D investment has always been an important tag distinguishing BYD from other automakers.

But this year, this indicator has seen some changes.

In the first half of 2026, BYD's R&D investment was 28.861 billion yuan, a year-on-year decrease of 6.54%. This is the first half-year R&D investment decline for BYD since 2020.

Moreover, not only did the total amount of R&D investment decrease, but the structure of R&D expenses also changed.

In the first half of this year, BYD's capitalized R&D expenses reached 5.554 billion yuan, accounting for 19.24% of R&D investment; while at the same period last year, this proportion was only 4.16%.

Here, a brief explanation of what R&D capitalization means is needed.

A-share listed companies' R&D investment can choose expensing, or can proceed to capitalization after meeting conditions. Expensing means R&D expenditure is directly recorded in the current period profit and loss; capitalization means qualified R&D expenditure is first recorded as assets, and then gradually recorded in costs through depreciation, amortization, etc.

In simpler terms, the higher the proportion of R&D expense capitalization, the less amount is deducted in the current period, and these amounts can be placed in the profit column, making book profits higher.

According to the data in the first half of this year, BYD's capitalized R&D expenses were 5.554 billion yuan.

If assuming the capitalization ratio remained at last year's same period level of 4.16%, then the capitalized R&D expenses for the first half of this year would be only about 1.2 billion yuan. Simple calculation shows that under unchanged other conditions, BYD's current period profit might be affected by about 4.3 billion yuan, leaving less than 8 billion yuan.

But it also needs to be emphasized here that R&D capitalization itself does not mean financial fraud or profit manipulation. As long as R&D projects meet the capitalization conditions prescribed by accounting standards, enterprises carrying out capitalization treatment is a normal accounting behavior, and the capitalization ratio of some automakers' R&D expenses may even reach 80%.

What is truly worth attention is actually that both numbers changed simultaneously: R&D investment declined, and the capitalization ratio increased. This forms a clear contrast with BYD in the past few years.

In the past few years, BYD, in its high-growth period, has always touted R&D investment, ranked first among A-share listed companies for two consecutive years, and the company currently has more than 120,000 R&D personnel. As of the first half of 2026, cumulative R&D investment has exceeded 270 billion yuan.

The decline in R&D investment in the first half of this year is not itself something that needs to be criticized per se, but it is a very signal worth paying close attention to.

Especially in the context of pressure on BYD's domestic market and declining profits, this means that the company that has been continuously increasing R&D investment in the past has begun to focus more on the relationship between input and output.

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Final Thoughts

In the past few years, what BYD has been best at is continuously expanding scale. From 2021 to 2025, BYD sales grew from 730,000 to 4.6 million units, an increase of about 6.3 times.

For a company with a highly vertically integrated supply chain, this not only means whole vehicle capacity must expand 6.3 times, but also capacity for a large number of self-supplied parts such as batteries and motors must expand synchronously. That was a typical high-growth stage, where BYD's employee count once peaked at 970,000.

But when the domestic new energy market shifted from incremental competition to stock competition, BYD also began to enter an adjustment period.

The era of relying solely on price cuts and over-specification for growth in the domestic market is passing, and the overseas market has given BYD new growth space. The sales, revenue, and profit margins in the first half of this year even proved that going overseas is not just a second growth curve, and may even become the most important growth source for BYD in the future.

At the same time, the first decline in R&D investment also means that BYD has begun to rethink the relationship between input, output, and profit. This does not mean that BYD no longer values R&D, but is an adjustment after high-speed growth.

So, rather than saying this is an unfavorable semi-annual report, it is more like a semi-annual report at a turning point period. And whether this transition can be completed smoothly will also determine whether BYD can truly become a global automaker.

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