BYD Shares Drop as China’s EV Price War Erodes Profits
Shares in Chinese electric vehicle giant BYD dropped by as much as 8% on Monday following a disappointing earnings report that revealed a significant dip in profits, driven by an intensifying price war in China’s EV market.
The company reported on Friday that net profit fell to 6.4 billion yuan ($900 million; £660 million) for the April to June quarter—a 30% decline compared to the same period last year.
BYD pointed to “increased price competition” as a key factor hurting both the company and the broader EV industry. The Shenzhen-based automaker is facing mounting pressure from domestic rivals like Nio and XPeng, as well as US-based Tesla—all of whom have slashed prices to attract customers in a fiercely competitive market.
The company’s stock opened sharply lower in Hong Kong on Monday before recovering some ground later in the day.
“Competition in China’s car market has reached a fever pitch,” BYD said in its filing. The firm also criticized “industry malpractices” such as excessive marketing, which it said are disrupting the market.
Automakers have been offering aggressive incentives—such as dealer subsidies and zero-interest financing—to win over increasingly price-sensitive consumers. The escalating discounting has raised concerns in Beijing, with authorities urging firms to curb the aggressive tactics to safeguard economic stability.
Industry estimates show that the average car price in China has dropped about 19% over the past two years, now hovering around 165,000 yuan ($23,100; £17,100).
Despite growing international sales, BYD’s earnings missed analyst forecasts that had expected modest growth. The firm has set an ambitious target to sell 5.5 million vehicles globally in 2025 but had only reached 2.49 million by the end of July.
Industrial policy expert Professor Laura Wu from Nanyang Technological University noted that BYD’s performance, while surprising, highlights that even the dominant player in China’s EV space isn’t immune to the harsh realities of a saturated market.
“The drop in stock price this morning reflects investor disappointment,” she said. She also warned that Beijing’s attempts to rein in the price war face challenges, as earlier policies encouraged an oversupply of EV manufacturers.
While consumers may enjoy lower prices now, Professor Wu cautioned that unchecked price cutting could lead to a glut of Chinese EVs and long-term market instability.
Still, some remain optimistic. Judith MacKenzie, head of Downing Fund Managers, told the BBC that the setback shouldn’t overshadow BYD’s rapid growth.
“They’ve had such a meteoric rise—it’s okay to hit a bump in the road,” she said.
BYD recently overtook Tesla in annual revenue, becoming the world’s top EV maker in 2024. Its success has largely been driven by the popularity of its hybrid and electric vehicles across China, Asia, and Europe.
