Geely Automobile’s shares dropped on Thursday after the Chinese carmaker reported a big hit to its profits. The company said its net profit for the first half of the year was 9.29 billion yuan, about $1.29 billion. That is down 14% from the 10.79 billion yuan it made a year ago.
This happened even though its revenue went up 27% to 150.3 billion yuan. The main reason was rising costs and tough competition in China’s electric vehicle market. Research and development spending rose 21% to 7.33 billion yuan. At the same time, the average selling price of its cars fell because of heavy discounting in the ongoing price war.
By 04:28 GMT, Geely’s shares in Hong Kong were down 3% to HK$15.65.
The company sold a record 1.41 million vehicles in the first six months, up 47% from last year. More than half of those were electric cars. Still, the profit margins were squeezed by price cuts and foreign exchange swings.
Geely is keeping its full-year sales goal of 3 million vehicles. However, it decided not to pay an interim dividend.