BEIJING (Reuters) - Chinese electric car maker BYD Co Ltd said on Tuesday it expected full-year net profit to fall by as much as 43%, as sales of new energy vehicles in the world’s biggest auto market plunged following a cut in government subsidies.
The Shenzhen-based company, which is backed by U.S. investor Warren Buffett and whose products include battery electric and plug-in hybrid vehicles, posted net profit of 119.72 million yuan ($16.95 million) in the third quarter, down 88.6% from 1.05 billion yuan a year earlier.
It said 2019 profit would be between 1.58 billion yuan and 1.77 billion yuan, down from 2.78 billion yuan a year earlier.
“As subsidies on new energy vehicles drop sharply, sales of new energy vehicles are falling short of expectations. It is expected that the profit of the company’s new energy vehicle business will also decline to a certain extent compared with the same period of last year,” BYD said in a stock exchange filing.
BYD’s profit drop comes as auto sales in China fell for a 15th consecutive month in September, according to industry data, dampening hopes for a second-half turnaround.
Sales of new energy vehicles, which have long benefited from state support, have also been impacted by subsidy cuts, falling 34.2% in September following a 15.8% decline in August.
Revenue dropped 9.17% to 31.64 billion yuan in the third quarter. In the quarter ended Sept. 30, BYD sold 107,723 cars, down 15% from a year earlier.
BYD also faces intensifying competition as Tesla Inc started taking orders for China-made Model 3 sedans last week ahead of mass production from its $2 billion Shanghai factory expected later this year.
BYD, which has a joint venture with Daimler, said in July it would develop battery electric vehicles with Toyota Motor Corp.
Besides car manufacturing, BYD also assembles mobile phones, makes batteries for electric and plug-in hybrid vehicles and builds Skyrail, a monorail-like product designed for commutes in smaller cities.
Reporting by Yilei Sun and Brenda Goh, Editing by Lincoln Feast and Deepa Babington