A Crossroad of Domestic Crisis and Overseas Growth in China's EV Industry
“Has BYD gone bankrupt?”
Recently, rumors of bankruptcy surrounding BYD, one of the leading companies in China's EV sector, have rapidly spread, fueling market confusion. Several media outlets and YouTube channels have sensationalized the possibility of BYD’s financial crisis, increasing anxiety among investors and consumers.
However, the reality is far more complex. The core issue lies not in the headquarters of BYD, but in liquidity problems faced by several dealerships. This is closely tied to structural challenges within the broader Chinese EV industry. Meanwhile, BYD has been strengthening its global presence by recording all-time high export numbers in overseas markets.
This article examines the origins and context of the bankruptcy rumors, analyzes BYD's overseas strategy and performance, and evaluates future challenges from a balanced perspective.
1. Why Did the Bankruptcy Rumors Emerge?
Dealership Closures Sparked Misunderstandings
In April 2025, a major BYD dealership in Shandong Province, Qiancheng Holdings, abruptly shut down operations. The company specialized exclusively in BYD vehicles, operated over 20 branches, and generated annual sales of 3 billion yuan with 1,200 employees. However, aggressive expansion, excess inventory, and supply pressure from BYD led to severe liquidity problems, ultimately resulting in closure.
More than 1,000 customers experienced delayed vehicle deliveries and broken after-sales service commitments. Other dealerships, such as Xingqi Group in Liaoning Province, also faced similar shutdowns in the following months.
This series of dealership failures was misinterpreted as a sign of BYD's corporate collapse—thus giving rise to the bankruptcy rumors.
2. Is the Head Office Really at Risk?
Strong Financials and Solid Business Performance
BYD headquarters responded by clarifying that the issues occurred in independently managed dealership networks, not within its direct operations. The dealerships are separate legal entities operating autonomously under supply agreements, and therefore, their problems are unrelated to the parent company's financial health.
BYD’s 2024 financial highlights include:
- Cash reserves of approximately 311.5 billion yuan (about $45 billion)
- Total EV sales of 3.02 million units, with double-digit growth year-over-year
- Record net profit of 40.3 billion yuan (approximately $5.6 billion)
Global media outlets like Forbes and Bloomberg have described BYD as a company maintaining a “healthy growth structure,” with no imminent signs of bankruptcy.
3. Structural Causes Behind the Crisis
Internal Bottlenecks in China’s EV Market
These dealership bankruptcies are not isolated mismanagement cases but stem from several structural bottlenecks, including:
- ① Overproduction – Subsidies prompted manufacturers to rapidly scale up output
- ② Inventory Risk Transfer – Manufacturers pushed unsold cars to dealers (channel stuffing), shifting stock burden onto them
- ③ Demand Slowdown Post-Subsidy – Market demand weakened after government subsidies ended in late 2022, reducing inventory turnover
- ④ Price Wars – Triggered by Tesla’s price cuts, leading BYD to follow suit, intensifying discount competition
- ⑤ Dealer Profit Margin Collapse – Dealers bore the brunt of selling losses as factory prices remained high
In short, BYD’s distribution strategy failed to account for dealer liquidity, which became the critical trigger of this crisis.
4. What About Overseas Performance?
Record Exports and Expansion of Local Manufacturing
While the domestic distribution model faced strain, BYD was breaking export records overseas.
- 2024 overseas sales: 410,000 units (72% year-on-year growth)
- Jan–May 2025 overseas sales: 370,000 units (112% YoY growth)
- May 2025 exports alone: 89,000 units, a monthly record
BYD is also actively expanding its overseas manufacturing bases:
- Hungary (Szeged plant): 200,000-unit annual capacity, completion expected late 2025
- Brazil (Camaçari plant): 150,000-unit capacity, full-scale operations by end of 2025
- Expansion of local assembly in Thailand and Uzbekistan
This strategy supports competitive advantage through tariff avoidance, supply chain efficiency, and locally tailored offerings.
5. Are Overseas Markets More Profitable?
‘Seal U’ Generates Over 10x More Profit in Europe Than in China
One of BYD’s overseas success drivers is its high-margin strategy. In developed markets like Europe, the company competes on brand and technology, not price, resulting in significantly higher per-vehicle profits.
- Seal U profit in Europe: approx. €14,300
- Same model in China: approx. €1,300
These high-margin international sales not only boost global brand positioning but also significantly enhance overall profitability. BYD aims to achieve over 15% of its total EV sales from overseas in 2025 and plans to raise that ratio to over 50% in the long term.
6. How Should Growth and Risk Be Balanced?
The Need to Pursue Global Expansion While Reforming Domestic Structures
Although overseas performance supports BYD’s financial stability, the fragility of its domestic distribution network could erode consumer trust and damage its brand image.
Service delays and undelivered vehicles due to dealer shutdowns have negatively impacted BYD’s reputation, potentially undermining its domestic market foundation.
In response, BYD must urgently implement structural reforms, including:
- Redesigning supply policies
- Distributing inventory risk more evenly
- Revising dealership contract terms
- Introducing risk-sharing mechanisms with dealers
Industry-wide cooperation is also needed, including government regulation, support, and discussions to overhaul the EV distribution model in China.
7. Conclusion: Is This Crisis Also an Opportunity?
Rumors Were Exaggerated, but the Structural Problems Are Real
The “BYD bankruptcy” narrative is a misinterpretation of isolated dealership failures, not a reflection of the company’s financial reality. In fact, BYD remains in a stable condition, with strong financials and growing international sales.
However, the incident highlights fundamental flaws in the structure of China's EV market.
BYD is well-positioned to become a global EV leader through its overseas success, but unless it reforms its domestic distribution system, its growth could be built on unstable ground.
Therefore, both BYD and the broader EV industry must strike a strategic balance between global vision and domestic system stability.
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