BYD Co. is borrowing a lot of money to get through its prolonged earnings slump.
Short-term borrowings jumped 72% within three months to 66.3 billion yuan ($9.7 billion) by the end of March, according to the Shenzhen-based carmaker’s financial results released Tuesday. That’s as quarterly profit tumbled 55% to its lowest level in more than three years.
The spike signals that BYD’s cash needs have become increasingly urgent as China’s years-long price war takes its toll on the country’s automakers — even its global champion. It also suggests that old habits of dragging out payments to suppliers are catching up with the world’s largest EV maker.
BYD shares rose as much as 4% to HK$107.90 in early Hong Kong trading on Wednesday as analysts at brokerages from Morgan Stanley to JPMorgan Chase & Co. wrote BYD’s earnings may have bottomed in the first quarter.
The surge in the borrowings occurred “mainly due to the increase in group financing needs,” BYD said in its report, without explaining further. The company didn’t immediately respond to a request for elaboration on its report, which was released after regular office hours.
BYD also saw a surge in bills payable, which doubled to 48.6 billion yuan as of the end of March. Like the short-term borrowings, those rose to all-time highs for the company, according to public data compiled by Bloomberg.
For years, BYD used an IOU-based system that allowed it to delay invoice fulfillments for months at a time. But after the government clamped down on the practice, the company has been forced to pay parts makers faster, leading to an increase in interest-bearing debt, people familiar with the matter have said.
Still, overall liabilities only rose 2.4% to 640 billion yuan during the quarter as the company saw large drops in trade payables — unpaid invoices — and unspecified “other payables,” according to BYD’s financial statements.
Meanwhile, inventory piled up despite company efforts to clear stock, with the value of the company’s unsold products climbing 16% to 160.4 billion yuan within three months, according to the results.
As for earnings, net income fell for the fourth consecutive quarter, though the 4.08 billion yuan generated in the three months ended March was roughly in line with the average of five analyst estimates compiled by Bloomberg. Revenue fell 12% from a year earlier to 150.2 billion yuan, topping estimates.
Profits have continued to fall as the company faced intensifying competition from the likes of Xiaomi Corp. and Geely Automobile Holdings Ltd. That’s prompted the industry leader to slash prices to stay ahead, with discounts in March climbing to the highest level in two years, and eroding profits that BYD generates from each car.
At the root of the relentless price cuts is overcapacity. China’s car factories are capable of producing 55.5 million vehicles a year, but domestic sales reached only about 23 million in 2025, according to the China Automotive Technology and Research Center. That puts average capacity utilization in Chinese auto factories at just around 50%, an unsustainable figure over the long term.
Still, analysts such as Eugene Hsiao at Macquarie Capital Ltd. have said that the squeeze on margins could ease in the coming quarters — a view shared by other analysts such as Joanna Chen at Bloomberg Intelligence.
There were some green shoots. Overseas sales jumped more than 50% in the first quarter as surging oil prices boosted demand for electric cars. Exports accounted for about 45% of BYD’s deliveries in the first quarter, putting it on track to reach its target of selling 1.5 million cars outside China this year.
The stock also received a boost Monday on reports BYD had received more than 30,000 pre-orders within the first 24 hours of the launch of its new flagship Great Tang sport utility vehicle. Unveiled at the Beijing auto show, the seven-seater features BYD’s latest blade batteries capable of driving nearly 1,000 kilometers (620 miles) on a single charge and is expected to start at 250,000 yuan.
At the auto show, which started last week, BYD occupied an entire exhibition hall to showcase its multi-brand strategy and showed off cars equipped with the latest versions of its top-of-the-line “blade batteries.”