HONG KONG (AP) — Chinese automaker BYD said Friday its annual sales rose to a record $116 billion, outpacing Tesla’s, but its profit fell for the first time since 2021 under pressure from cutthroat competition.

BYD, the largest electric vehicle maker, has been expanding into global markets including Latin America and Europe, where auto analysts say profit margins are typically higher than in China. It’s also banking on cutting-edge technology upgrades to grow appeal, announcing a new powerful fast-charging battery days ahead of its earnings report.

With competition inside China at punishingly high levels, analysts foresee a tough road ahead this year. But in a boost for EV makers, higher oil and gasoline prices due to the Iran war are starting to recharge interest in renewable energy.

Domestic sales have been declining recently for Shenzhen-based BYD, which overtook Tesla in 2025 as the world’s biggest EV maker, selling 2.26 million electric vehicles last year, up 28% from a year earlier. Tesla said it delivered 1.64 million vehicles, down 9%.

The Chinese company’s revenue grew 3.5% to 804 billion yuan ($116 billion) in 2025, another record, eclipsing rival Tesla’s full year revenue of $94.8 billion.

However, BYD said its annual profit was 32.6 billion yuan ($4.7 billion) last year, down 19% from 2024. The company last booked a profit decline in 2021.

The Chinese auto group has reported six straight months of declining sales. Total sales in January-February fell 36% year-on-year to 400,241 units, as higher overseas sales didn’t offset persistent weakness in domestic demand.

“They cannot rely on mass market EVs to help them keep the same volume that they were selling,” said Chris Liu, a Shanghai-based senior analyst at advisory group Omdia.

A fierce price war in China, the world’s biggest auto market, has hurt BYD’s profitability, and rivals such as Geely Auto were gaining ground in early 2026.

“We also recognize that competition in the NEV (new energy vehicle) industry has reached a fever pitch, and is undergoing a brutal ‘knockout stage’,” chairman Wang Chuan-fu wrote in its earnings report Friday.

Wide-reaching government subsidies meant to encourage Chinese drivers to switch to EVs have been extended but are scaled back this year, putting pressure on carmakers. Expectations are that the Iran war and the global energy shock would push more people to switch to EVs, with the likes of BYD standing to gain at home and overseas.

BYD shares traded in Hong Kong have fallen more than 20% over the past year but have been rising in March.

Meaningful technology upgrades may be the key to regain markets, analysts say. BYD in early March launched a new generation of the powerful “blade” EV battery that can achieve a nearly full charge in nine minutes.

It also introduced new car models such as the new Datang SUV installed with its latest technologies, which auto analysts at HSBC said in a research note could “help BYD to regain domestic market share through technology leadership.”

Overseas, BYD plans to keep growing its global market share to hone its profits.

It has made inroads in the UK, Brazil and Argentina and is aiming to sell around 1.3 million vehicles overseas in 2026, up from about 1.05 million last year. Its strategy in building and expanding factories overseas will also help boost its international market growth, said Claire Yuan at S&P Global Ratings.