The Importance of How BYD Spends on R&D, Beyond Just How Much They Spend - CleanTechnica

The article from CleanTechnica highlights the significance of not just the amount BYD spends on research and development (R&D), but how it accounts for and manages this spending. BYD predominantly expenses its R&D costs—98.2% of its 54.16 billion yuan R&D expenditure in 2024 was charged directly to operating expenses—rather than capitalizing them as investments on the balance sheet. This contrasts with other automakers like Great Wall Motors, which capitalizes about half of their R&D spending. BYD’s approach results in lower reported profits since R&D expenses reduce net earnings immediately, but it reflects a strategic choice aligned with its highly integrated, in-house R&D model. BYD’s vertical integration allows it to leverage a massive internal R&D workforce of over 120,000 engineers, reducing reliance on suppliers and enabling faster, more efficient product development cycles—down to 18 months compared to traditional automakers. This internal focus on creating proprietary technology and intellectual property (IP