(Bloomberg) -- After getting a jump on competitors in the latest round of China’s electric-vehicle price war, BYD Co. now faces a key test of proving that it can withstand the impact on profits.

China’s biggest EV maker broke with its usual practice of not providing guidance ahead of its earnings report that was released Monday and showed revenue that was weaker than most analysts had anticipated. Even before the latest results, the stock’s volatility skew this month jumped to the highest since October 2022, indicating increased investor demand for downside protection.

Slowing growth, a rush of new competitors and discounts initiated by Tesla Inc. last year have ramped up pressure in the Chinese EV market, the world’s largest. Investors will be scrutinizing BYD’s results comments for plans for further aggressive steps after a move to cut prices on mass-market models ahead of peers this year scored success.

BYD “has fired off the first shot, taking market share from internal combustion-engine cars,” Daisy Li, fund manager at EFG Asset Management HK Ltd, said before the earnings release. “EV penetration is rising and sales are growing, but that’s coming with lower profits.”

Read More: BYD Takes On EV Laggards Toyota, VW With Steep China Price Cuts

Helped by the price reductions, BYD sold about 300,000 vehicles in March, rebounding from a pronounced weakness seen in the prior month. That has helped the stock, which prior to the earnings release was down only marginally this year even as a gauge of global EV makers has declined about 15%.

The resilience may leave the shares vulnerable to selling pressure in the wake of the disappointing results. While net income rose 11% year-on-year to 4.57 billion yuan ($631 million) in the three months ended March 31, revenue grew at its slowest pace in four years, up 3.9% to 124.94 billion yuan. That sales figure was well short of analyst estimates of 132.53 billion yuan.

While the price cuts for cheaper models have hurt its profitability, BYD’s growth in higher-end models and overseas sales are among key points traders are watching for potential positives.

“We believe BYD’s strategy is to leverage domestic mass products to maintain production utilization and operating leverage, and balance profit margins with premium models and exports,” Bing Yuan, a fund manager at Edmond de Rothschild Asset Management, said before the release of earnings.

BYD has been expanding its luxury lineup, including the Auto China show launch of the Denza Z9GT, a shooting-brake style design with a heavy emphasis on technology. In Februray, it rolled out its $200,000-plus Yangwang U9 supercar to rival offerings from Ferrari NV and Lamborghini.

The company has a target of selling 500,000 vehicles outside China this year, and then doubling that in 2025. It also plans to build its first European car factory in Hungary. 

“Exports coming from a low base are expected to continue to show strong growth — this will remain a key supporting factor for BYD’s revenue growth and likely margin,” Robert Mumford, a portfolio manager at GAM Hong Kong Ltd, said ahead of earnings. 

“Outside the leaders, we have been fairly bearish on the sector given high levels of competition and pricing pressure.”

(Corrects throughout to reflect that BYD has announced results.)

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