Shares of Chinese electric vehicle maker BYD fell by as much as 8% on Monday. The decline followed weaker profits, pressured by fierce competition and aggressive discounting in the market.
Quarterly earnings take a hit
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. That represented a 30% drop compared with the same period last year. The company said escalating price competition among EV brands had weighed heavily on results.
Rivals push prices lower
The Shenzhen-based automaker faces rising pressure from Nio, XPeng, and Tesla. All have slashed prices to attract buyers. BYD shares opened lower in Hong Kong but regained some ground later in the day.
The company said competition had reached “fever pitch”. It also criticised excessive marketing, which it argued disrupted the sector. EV makers have relied on subsidies and zero-interest loans, further squeezing profit margins.
Beijing urges caution
Chinese regulators have called on automakers to curb aggressive discounting, warning of risks to the broader economy. Average car prices in China have fallen around 19% over two years. They now stand near 165,000 yuan ($23,100; £17,100), according to industry figures.
Despite strong overseas demand, BYD’s earnings fell below analyst expectations. Forecasts of modest growth turned into a notable decline.
Sales targets face challenges
BYD set a goal of 5.5 million global sales this year. By the end of July, it had sold only 2.49 million vehicles. Prof Laura Wu of Nanyang Technological University in Singapore called the results “surprising”. She said even industry leaders are vulnerable in a cut-throat price war.
Wu noted the stock drop reflected investor disappointment. She added that previous policies encouraged too many competitors, making the market harder to control. While discounts benefit consumers now, she warned they could create long-term oversupply.
Analysts remain cautiously optimistic
Investment manager Judith MacKenzie of Downing Fund Managers said the setback 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 powered by strong demand for hybrid models across China, Asia, and Europe.
