As time enters May, financial reports from major listed automakers for the first quarter of this year have been released one after another.
If facing the financial report data directly, perhaps the eight characters "glorious in public, desolate in private" best describe the feeling.
In the first quarter of this year, the market share of independent brands surged to 67.9%, hitting a historical high, while the market share of joint venture brands remained at only 24.9%, directly "halved" from 51.2% in 2021.
Ask, is it glorious?
However, according to financial reports, the combined net profit of these five top automakers—BYD, Geely, Chery, SAIC, and Great Wall Motor—during the first quarter is less than two-thirds of CATL's 20.738 billion yuan.
A battery maker alone netted 20.7 billion in a single quarter, averaging 230 million yuan per day, while five of China's largest vehicle manufacturers bundled together still couldn't win.
Now, we don't care where time went, we just care "Where did the money of the vehicle manufacturers go?"
Data from the National Bureau of Statistics shows that the industry's revenue in the first quarter reached 2.41 trillion yuan, a year-on-year decline of 0.2%; costs were 2.14 trillion yuan, a year-on-year increase of 0.7%; and profit was 78.4 billion yuan, a sharp year-on-year drop of 18%.
The industry's sales profit margin is only 3.2%, far below the average of about 6% for downstream industrial enterprises.
Cumulative automobile production and sales in the first quarter reached 7.039 million units and 7.048 million units, down 6.9% and 5.6% year-on-year respectively.
"Volume down, profit down", none escaped. This is the basic situation.
But if we stare fixedly at "how much was earned", that falls into a cliché; one should look at "where the money was spent" and "what structural changes occurred", perhaps that is another picture.
So, let's talk about subjective factors first.
BYD's net profit attributable to parent company in the first quarter was 4.085 billion yuan, halved by 55.38% year-on-year. Looking at this number alone, it is indeed striking.
But please note, its revenue still reached a high of 150.225 billion yuan, firmly holding first place in the industry. The gross profit margin was 18.81%, still an excellent student.
BYD's profit "halving" is essentially the result of an active choice.
From launching the intelligent driving version "price cut, feature increase" at the beginning of the year to multiple main models continuing to offer concessions, this was a precise battle to exchange profit for market share.
The result is that BYD's terminal market share did not fall but rose, firmly holding half of the new energy market.
Looking at the asset-liability ratio of 70.94%, it is relatively high among mainstream vehicle manufacturers. But what does high debt correspond to? It corresponds to large-scale investment in battery and vehicle capacity construction globally.
Thailand factory, Brazil factory, Hungary factory... BYD is using today's capital expenditure to pave the way for tomorrow's globalization map. Once these capacities are put into production, they will bring an exponential release of scale effects.
Besides BYD, Seres is the most interesting enterprise in this list.
Revenue was 25.746 billion yuan, up 34.46% year-on-year, ranking second in growth rate. Net profit attributable to parent company was 754 million yuan, a slight increase of 0.89% year-on-year, but deducting non-recurring net profit was only 103 million yuan, down 73.87% year-on-year.
Many people will say "without subsidies, they don't make money", but from another angle, Seres's R&D expenses in the first quarter were 1.794 billion yuan, surging nearly 70% year-on-year; sales expenses were 3.719 billion yuan, surging 39.7% year-on-year.
Where was this money spent? Spent on the product iteration of the AITO series in deep cooperation with Huawei, spent on channel expansion and brand building.
Obviously, in the process of building a high-end brand, Seres's choice is: grab share first, build awareness, then talk about profit.
The situation of the AITO brand's market position becoming more and more stable is enough to prove that scale effects will definitely lead to a decrease in expense ratios. This is not blind money burning; this is the standard approach for starting high-end brands.
SAIC Group performed relatively steadily.
Revenue was 140.418 billion yuan, a slight decrease of 0.31% year-on-year; net profit attributable to parent company was 3.026 billion yuan, a slight increase of 0.09% year-on-year.
Under such a difficult industry environment, SAIC was able to maintain profit level, and the resilience of its joint venture sector and support from export business cannot be underestimated.
Geely's revenue was 83.776 billion yuan, up 15.25% year-on-year, one of the few top enterprises with double-digit revenue growth. Net profit attributable to parent company was 4.166 billion yuan, down 26.56% year-on-year.
On the surface, it looks like "revenue increase but no profit increase", actually, the main reason for profit decline is Geely's continuous heavy investment in new energy transformation.
Zeekr, Galaxy, Lynk & Co New Energy... R&D and channel construction for multi-brand matrices require real money.
So, in the first quarter, a considerable part of Geely's profit turned from cash into technical assets and brand assets.
Coincidentally, Great Wall Motor is similar.
Great Wall's revenue was 45.109 billion yuan, up 12.72% year-on-year; net profit attributable to parent company was 945 million yuan, down 46.01% year-on-year.
Double-digit revenue growth indicates one thing: Great Wall's Tank brand, pickup business, and overseas market are all exerting strong force.
The core reason for profit decline is the cost increase brought about by product structure upgrades.
Among them, the R&D and material costs of the Tank series and Wey brand high-end models are far higher than traditional SUVs. But this is exactly the path Great Wall actively chose, not doing low-end involution, persisting in breaking out upwards.
So, looking at the long term, the key is the improvement of Great Wall products' premium capability.
Chery Automobile's revenue was 68.57 billion yuan, down 3.45% year-on-year; net profit attributable to parent company was 4.17 billion yuan, down 10.32% year-on-year.
Although Chery welcomed a double decline, fortunately overseas markets were still strong enough, the decline was not much, within controllable and acceptable range.
Changan Automobile's numbers were slightly too ugly. Its net profit attributable to parent company was only 351 million yuan, plummeting 74.09% year-on-year. Changan is at a critical period of product structure adjustment and transformation, please be careful.
There is no need to continue counting in detail, anyway, each family has its own joys and sorrows. But, to ask "Where did the money of the vehicle manufacturers go?", subjective factors are undoubtedly key, but objective reasons also cannot be ignored.
Let's talk straight.
Since the battery factory made money, then the first objective reason, and also the most important one, is that battery prices skyrocketed.
Since entering 2026, lithium carbonate prices have surged from about 110,000 yuan per ton to around 180,000 yuan, an increase of over 60%.
Batteries account for three to four tenths of the total vehicle cost. With this item alone, the cost of a medium-sized electric vehicle increased directly by 5,000 yuan.
"Misfortunes never come singly", on the other hand, automotive-grade storage chip prices surged.
Among them, DDR4 and DDR5 memory cumulative increases reached 150% and 300% respectively. Prices of metals such as copper and aluminum are also on the rise; there isn't a single comfortable one in the entire upstream bulk commodities.
On that side, cost surged; on this side, price wars continue.
Counting on fingers, this round of price wars has lasted for a full three years. The most tragic results have appeared, automobile industry profits fell from nearly 6% in 2022 to 2.9% in the first two months of this year, single vehicle gross profit dropped from 20,000 yuan to 11,000 yuan, nearly halved.
If an industry operates with a profit margin of less than 5% for a long time, it is not doing business, it is doing charity.
Fortunately, some positive sprouts have appeared.
At the end of the first quarter, beginning of the second quarter, more than 15 new energy brands sequentially issued price adjustment announcements or tightened terminal discounts.
Data from authoritative institutions shows that consumers holding a negative attitude towards price wars account for 22.2%, exceeding the 16.5% holding a positive attitude. Consumers are already tired of the status quo of cars "depreciating immediately after purchase".
In February this year, the State Administration for Market Regulation officially released the "Compliance Guide for Automobile Industry Price Behavior", clearly prohibiting dumping behaviors below cost.
Obviously, policy, market, and capital sides, three forces are jointly pushing the price war towards its end.
Well, let's give a small summary.
From the overall industry perspective, the most fundamental problem currently is not lack of orders, not lack of technology, or even not lack of money.
What we lack is "order", an industrial order that allows vehicle manufacturers to obtain reasonable profits.
Anyway, it is a fact that OEMs didn't make money. To turn the situation around, the things that need to be done seem not difficult to consider.
For example, car companies need to withdraw the "battlefield" of price wars themselves.
Raising prices seems unlikely, but returning to normal commercial logic, maintaining a reasonable pricing system, competing through product power and service, rather than endless terminal discounts and disguised price reductions is completely possible.
Also, industrial chain vertical integration must accelerate.
Why can BYD maintain a relatively stable gross profit margin in fierce competition? Because it has its own battery factory, its own supply chain.
However, since we mentioned "industrial order" in the above text, in this "beautiful moment" when new energy vehicle penetration rate broke through the 60% mark, we still need to seek the help of "policy" as we did when new energy was just starting. We rely on policy guidance to shift the main task from "seeking volume" to "seeking quality".
In the past and present, because of "seeking volume", the government's "old-for-new replacement policy" paid off, but it may also objectively keep car companies fond of market operations of "exchange price for volume".
Therefore, price wars, want to stop but can't stop.
"Seeking quality" promotes the industry much more advanced.
For example, the growth story of Xingting Technology is a typical case.
Xingting Technology, injected by Geely and Baidu capital, started in Hubei Wuhan in 2018.
In 2021, the company was in the R&D critical period, Hubei SASAC Yangtze River Industry Group invested in Xingting Technology 900 million yuan in three phases, striving to ensure smooth scientific research.
Nowadays, Xingting Technology's smart cockpit chips are used in 10 domestic and foreign main models such as Geely Lynk & Co and FAW Hongqi.
This is "seeking quality" government capital intervention. If such "patient capital" accompanying R&D is more the better, it will certainly improve the industry environment and order.
Finally, back to a more naive question.
A car company, normal operation, normal profit, then invest the earned money into the next generation technology and products, this is the simplest business loop.
This year's first quarter financial performance of Chinese listed automakers tells us, never let this loop develop cracks.
