Shares of Chinese electric vehicle maker BYD dropped by up to 8% on Monday. The decline followed weaker profits, driven by an intensifying price war in the country’s EV market.
Profits take a hit
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. That represented a 30% decline compared with the same quarter last year. The company said fierce price competition among EV brands had weighed heavily on its results.
Competition pushes prices down
The Shenzhen-based automaker faces stiff rivalry from Nio, XPeng, and Tesla. All have cut prices to win customers. BYD shares opened weaker in Hong Kong but recovered some ground later in the day.
The company said competition had reached “fever pitch”. It also criticised excessive marketing, which it said disrupted the market. Manufacturers have relied on subsidies and zero-interest loans, further squeezing margins.
Beijing calls for restraint
Chinese regulators have urged carmakers to halt steep discounts, warning of risks to the wider economy. Average car prices in China have fallen about 19% over the past two years. Current prices stand near 165,000 yuan ($23,100; £17,100), according to industry data.
Despite strong international sales, BYD’s earnings fell short of analyst expectations. Modest growth forecasts turned into a significant decline.
Sales targets face pressure
BYD aimed to sell 5.5 million vehicles globally this year. By the end of July, it had sold only 2.49 million. Prof Laura Wu of Nanyang Technological University in Singapore described the results as “surprising”. She said they showed even leading companies remain vulnerable in a cut-throat market.
Wu noted the share price decline reflected investor disappointment. She added that earlier policies encouraged too many players, making competition harder to manage. While lower prices benefit consumers today, she warned they could lead to oversupply in the future.
Analysts see a temporary slowdown
Investment manager Judith MacKenzie of Downing Fund Managers said the decline should not be overemphasised. She argued that BYD’s rapid growth made a temporary slowdown inevitable.
The company has already overtaken Tesla as the world’s largest EV maker, surpassing it in revenue in 2024. Its rise has been fuelled by strong demand for hybrid vehicles across China, Asia, and Europe.
