Shares of Chinese electric vehicle maker BYD fell by up to 8% on Monday. The decline followed weaker profits, driven by an escalating battle over prices in the competitive EV market.
Quarterly profits under pressure
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. That marked a 30% decline compared with the same period last year. The company said intense price competition among EV makers had weighed heavily on results.
Rivals push prices lower
The Shenzhen-based automaker faces stiff competition from Nio, XPeng, and Tesla. All have cut prices sharply to attract buyers. BYD shares opened weaker in Hong Kong but recovered some ground later in the day.
The company described competition as reaching “fever pitch”. It also criticised excessive marketing, saying it disrupted the market. EV makers have offered subsidies and zero-interest loans, further squeezing profit margins.
Beijing urges restraint
Chinese regulators have called on carmakers to curb aggressive discounting, warning of risks to the wider economy. Average car prices in China have dropped around 19% over two years. They now 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. Predictions of modest growth turned into a sharp decline.
Sales targets face challenges
BYD aimed to sell 5.5 million vehicles worldwide 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 stock drop reflected investor disappointment. She added that past policies encouraged too many players, making competition harder to control. While lower prices benefit consumers now, she warned of long-term oversupply risks.
Analysts see temporary setback
Investment manager Judith MacKenzie of Downing Fund Managers said the decline should not be overstated. She argued that BYD’s rapid rise made a slowdown inevitable.
The company has already overtaken Tesla as the world’s largest EV maker, surpassing it in revenue in 2024. Its growth has been fuelled by strong demand for hybrid vehicles across China, Asia, and Europe.
