A Study on Limitation of BYD's Sustainable Growth and EV Overcapacity of China

Thanks to a strong EV (PHEV) promotion policy of China, the BYD rapidly emerged as the global rival of TESLA. But, lots of mass media argues the risk of BYD since the 2Q 2025. So, this study managed three topics to access the limitation of BYD's sustainability together with the EV overcapacity issue of China. They include, 1) How about the management performance of BYD is when comparing it with those of global automakers? 2) What is the implication of BYD's financial statements change when comparing it with those of global automakers? 3) What is the institution factor of Chinese EV overcapacity and the side effect? Above all, in order to clarify the BYD's position, this study analyzed the management result and financial statements of four automakers, Toyota, Hyundai, Nissan & TESLA. In result, the management performance of BYD has improved since 2021 with a help of EV promotion policy post-pandemic. However, BYD too much depends on the short-term debt rather than the long-term debt, which is to works as a critical deterrent factor of sustainable growth due to the increase of delayed account payable and accrued expense. In addition, BYD would not be able to cover whole debt with only its own equity and retained earnings because of a relatively very high total liability ratio. The EV overcapacity issue of China is hard to be settled in a short period of time because local governments cannot be free from the conflict of interests as for the bankruptcy of local EV firms. In particular, the EV price war is likely to result in the collapse of used EV market of China due to the angry of existing buyer and the breakaway of potential buyer.