Buffett-Backed BYD's Q3 Earnings Up 3000% As China EV Sales Bounce Back

BYD Company Limited BYDDF enjoyed robust earnings in the third quarter due to a bounce-back in demand for electric vehicles in China and increased sales of face masks.

What Happened: The Chinese automaker backed by Berkshire Hathaway Inc (NYSE: BRK-A) (NYSE: BRK-B) Chairman Warren Buffett released its third-quarter results on Thursday.

Sales rose 41% to $6.67 billion in the three months through September, while the automaker’s net profit increased 1,362% to $262.1 million (RMB 1.75 billion).
Earnings per share rose 3,000% from the similar quarter a year ago at $0.093 (RMB 0.62).

The company said its new flagship model “Han” and modified flagship model “Tang” both secured a large number of orders and continue to drive strong growth in sales volume.

The automaker said its market supply of materials for pandemic prevention has “gradually stabilized.” 

Why It Matters: Last month, BYD had said there is a strong demand for its luxury sedan “Han,” which saw more than 40,000 orders within two months of launch, according to CNBC.

Other Chinese EV makers such as Xpeng Inc XPEV have also seen a rise in demand for their luxury vehicles.

Tesla Inc TSLA is the market leader in China with its Model 3 selling 70,591 units in 2020 through August and accounting for 13% of overall EV sales but Chinese automakers are fast catching up. 

China Association of Automobile Manufacturers forecasts new EV sales to reach 1.1 million by year-end despite the COVID-19 pandemic, according to Reuters.

In 2019, China reportedly accounted for half of the world’s EV sales with 1.2 million units sold in the country.

Apart from EV sales, BYD also likely benefited from its newly-established mask-making business, Bloomberg noted.

Price Action: BYD OTC shares closed 11.5% higher at $20.60 on Thursday. 

Photo courtesy: Wikimedia