China's BYD to undergo major restructuring of its research division... The cause is 'poor performance'

*This content was translated by AI.

Chinese electric vehicle maker BYD is reportedly dismantling its centralized research and development structure and shifting to a system of five independent brand research institutes to overcome recent poor performance and the limits of the domestic market, according to Chinese media outlets including Xinhua News Agency. This restructuring was directly triggered by the visible decline in sales and profitability that emerged in 2026.

According to market research and BYD's financial reports, total revenue in the first quarter of 2026 amounted to 150.225 billion yuan, a 11.82% decrease compared to the same period last year, while net profit plummeted by 55.38% year-on-year to 4.085 billion yuan. Furthermore, cumulative vehicle sales from January to May 2026 totaled only 1.405039 million units, a 20.32% drop compared to the same period last year. Although sales rebounded slightly in May, reaching 383,453 units driven by strong overseas exports, this was insufficient to fully offset the impact of the domestic slowdown that had persisted since the beginning of the year. This is why the need for BYD's organizational restructuring has arisen.

The background of this performance deterioration involves a complex mix of structural issues in the domestic market and changes in the overseas market environment. Externally, the overall demand for electric vehicles contracted due to changes in government subsidy policies, such as the reduction of purchase tax exemptions for new energy vehicles in China. At the same time, intense price competition involving approximately 70 models launched simultaneously in China's domestic market led to a decline in profit margins, and the increasing burden of foreign exchange losses due to sharp currency fluctuations became a key factor behind the sharp drop in first-quarter net profits.

Internally, the overlapping cycle of a major product generation shift (including the introduction of the second-generation Blade Battery and ultra-fast charging technology) created a period of "pent-up demand congestion" between the clearance of old model inventory and the launch of new models. Most critically, the existing centralized "Automotive Industry Institute" integrated control method managed a wide range of product lines—from entry-level brands like Dynasty and Ocean to premium brands like Denza and Fang Cheng Bao, and the ultra-luxury Yangwang line—resulting in overlapping detailed positioning among vehicle models and exacerbating internal cannibalization.

Consequently, BYD is improving its structure by reducing its core common technologies (such as batteries and electric platforms) to a "middle layer" retained centrally, while transferring product definition and model planning authority to five independent brand research institutes, forming a "frontline unit" model. Additionally, the company plans to introduce an independent profit-and-loss accounting system for each brand to strengthen accountability management, thereby eliminating marketing inefficiencies and clearly differentiating each brand for its specific target markets. However, BYD has not officially announced the details of its organizational restructuring to the media.

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*This content was translated by AI.