Japanese lawmaker: BYD's hidden debt 10 times higher than official figures

Japanese lawmaker Tsukasa Shirakawa has raised concerns about Chinese electric vehicle leader BYD, alleging the company is burdened by hidden debts significantly exceeding official figures. Shirakawa, writing for President Online, points to a report by Hong Kong-based GMT Research, which estimates BYD's actual liabilities at 323 billion yuan as of mid-2024. This figure is reportedly ten times higher than the amount BYD has disclosed.

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The substantial 'hidden debt' stems from BYD's extreme extension of supplier payment terms through a 'supply chain finance' mechanism called 'DiChain'.

The alleged hidden debt is attributed to BYD's "DiChain" supply chain finance mechanism. This system reportedly extends supplier payment terms to an average of 275 days, far beyond the typical 45-60 days. Suppliers needing immediate cash may have to accept discounted payments, effectively transferring financial strain to them. GMT Research suggests these deferred payments are essentially a form of "disguised debt" not listed as interest-bearing liabilities, creating a significant gap between BYD's reported financial health and its actual situation.

BYD's financial pressures are compounded by a fierce price war in China's EV market. The company has lowered prices by about 20% over the last three years to maintain market share, impacting its profitability. In the third quarter of 2025, BYD reported its first decline in both revenue and net profit since 2020, with net profit down 32.6% year-on-year and operating cash flow shrinking considerably.

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In the third quarter of 2025, BYD faced its first decline in revenue and net profit since 2020, with net profit down 32.6% year-on-year.

Shirakawa suggests that BYD's issues are symptomatic of broader structural risks within China's EV industry, which has benefited from government subsidies, low-interest financing, and land incentives. This has led to overcapacity and an aggressive price war as nearly 500 companies vie for market share. While BYD's size may prevent an immediate collapse, the industry's unresolved problems, including overproduction and financial leverage, could pose significant future challenges and continue to impact the global market through low-priced EV exports.

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This is not a problem of BYD alone, but a structural risk accumulated from years of reliance on government subsidies, massive investment, and excessive expansion in China's electric vehicle industry.