Shares of Chinese electric vehicle maker BYD fell by as much as 8% on Monday. The decline came after the company reported weaker profits, pressured by an intensifying price battle in the car industry.
Quarterly profits under strain
On Friday, BYD revealed net profit of 6.4bn yuan ($900m; £660m) for April to June. That marked a 30% fall compared with the same period last year. The company admitted that heavy discounting across the EV sector has weighed on results.
Rivals intensify competition
The Shenzhen-based automaker faces tough competition from Nio, XPeng, and US rival Tesla. All have slashed prices to win market share. BYD shares opened lower in Hong Kong on Monday but regained some ground later in the day.
The company said the battle had reached “fever pitch”. It also criticised excessive marketing practices, which it argued disrupted stability in the sector. Carmakers have relied on subsidies and zero-interest loans, adding further strain on margins.
Beijing seeks to calm the market
Authorities in Beijing have urged manufacturers to curb aggressive discounting, warning of wider economic risks. Industry figures show average vehicle prices in China have dropped around 19% in two years. They now sit near 165,000 yuan ($23,100; £17,100).
Despite strong sales abroad, BYD’s earnings fell below analyst expectations. Forecasts of a modest profit increase gave way to a sharp decline.
Ambitions meet tough reality
BYD aimed to sell 5.5 million vehicles worldwide this year. By the end of July, it had delivered just 2.49 million. Prof Laura Wu of Nanyang Technological University in Singapore said the performance was “surprising”. She argued that even industry leaders cannot escape the pressures of a cut-throat price war.
Wu said the stock’s decline reflected investor disappointment. She added that earlier government policies encouraged too many new players, making today’s competition harder to contain. While consumers enjoy lower prices, Wu warned of long-term oversupply risks.
Analysts call it a temporary setback
Investment manager Judith MacKenzie of Downing Fund Managers said the decline should not be viewed too negatively. She argued that BYD’s rapid rise made a slowdown almost inevitable.
The company has already overtaken Tesla as the world’s largest EV producer, surpassing it in revenue in 2024. Its growth has been fuelled by strong demand for hybrid models across China, Asia, and Europe.
