BYD Makes Money on Batteries, Another Listing Opportunity

The details are not clear, only that BYD will provide vehicle lithium-ion batteries to other companies through its subsidiary Fudi Battery.

This expansion of battery business may come from BYD's own operating pressure.

According to its 2020 financials, BYD's total operating revenue was CNY 156.6 billion, a year-on-year increase of 22.59%, while its net profit attributable to its parent company boosted considerably 162.27% to CNY 4.23 billion.

Despite this impressive performance, BYD's auto business is still in the stage of expanding revenue but stagnant profit.

BYD's revenue consists of three major parts, namely, automobile and related products, mobile phone and assembly business, rechargeable batteries and other businesses.

Its financials show that in 2020, BYD's automobile and related products revenue was CNY 84 billion, up 32.76% year on year, accounting for 54% of the total revenue. In contrast, the auto business just turned to positive when the auto industry recovered in 2H 2020.

Meanwhile, the overall sales volume of passenger cars in China has declined by 6%, and BYD follows that trend by dropping by 7.46%. Although the overall sales volume has increased by relying on the promotion of more expensive cars, it has not been fully extricated the pressure of the auto business.

Perhaps the expansion of battery business will bring new growth momentum to BYD. Up to now, Fudi Battery has been established for less than one year, and its first "Blade Battery" has been launched. It is also worth noting that Fudi Battery launched a DM-i super hybrid system in less than one year since its establishment and managed to invade the market share of traditional fuel vehicles.