A Case Study on Profitability and Prospects of New Energy Vehicle Industry

A new feature in China's economic status is transition from rapid growth to high-quality development, while green and innovation are important factors deciding high-quality development. To solve the increasingly prominent supply-demand contradiction as well as environmental pollution in traditional petroleum resources, the government has formulated and implemented a series of subsidy policies to promote the research and development of vehicles using new energy as fuel. Hence, operation analysis of new energy vehicle industry can enable understanding of the future development prospects of the Chinese economy from one side. This paper adopts a case analysis method. With the domestic leading company "BYD" in new energy vehicle industry as an example, it analyses its profitability from stability, sustainability, and cash supportability based on financial statement data and important indicators. Also, the future corporate development prospects are predicted from the company's macro and micro environments. The study found that as a leading new energy company, BYD has weak profitability at this stage due to excessive R&D costs in the early stage. However, it has good growth potential in the future. Other new energy vehicle companies also face the same situation. This paper puts forward suggestions for controlling the product production cost and enhancing technological competitiveness of products. It is hoped that some suggestions are useful to further improve profitability and continuously promote high-quality development of new energy vehicle industry.