(Bloomberg) — BYD Co., the Chinese electric-vehicle and battery maker backed by Warren Buffett, said first-half earnings fell as shortages of chips and lithium increased costs.
Net profit fell 30% to 1.17 billion yuan ($180 million), the Shenzhen-based company said in a statement Friday. Revenue rose 54% to 89.1 billion yuan.
BYD’s auto division, which contributed 43% of revenue, was hit by the global chip shortage, which has hobbled car-making giants from Volkswagen AG to Toyota Motor Corp. The resulting bottleneck threatens to cut worldwide auto production by as many as 7.1 million vehicles this year, according to IHS Markit.
“Overall profitability is affected to some extent by factors including rising prices of raw materials, such as bulk commodities,” BYD said.
Founded in 1995, BYD has grown into one of China’s largest EV and battery producers, riding a wave of demand for cleaner-energy vehicles stimulated by government plans to reduce carbon emissions. The company sold 246,689 cars in the six months through June, with more than half of them hybrid or pure-electric vehicles.
That echoed a trend throughout China. While overall sales of cars, sport utility vehicles and multipurpose vehicles fell 6.4% in July from a year earlier, sales of new-energy vehicles, surged almost 170% to 222,000 units, China’s Passenger Car Association said earlier this month. The association raised its forecast for new-energy vehicles to 2.4 million cars from an earlier estimate of 2.2 million.
Read more: BYD Switches to EV Batteries It Says Won’t Ever Catch Fire
Having taken an early lead in the sales of such vehicles, BYD now faces intensified competition from foreign rivals like VW and Tesla Inc., as well as Chinese competitors including Nio Inc. and SAIC Motor Corp.
BYD’s market share of China’s alternative-energy vehicle market rose to 16% in June, the company said, citing data from the China Association of Automobile Manufacturers.
Surging demand and tighter supply has pushed up prices of raw materials used in batteries, particularly lithium. Fitch Solutions said in May that the price of lithium will keep rising this year and next.
Shares of BYD closed 2.3% higher in Hong Kong on Friday ahead of the earnings release. The stock is up 29% this year.
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