Shares of Chinese electric vehicle maker BYD fell by up to 8% on Monday. The drop followed weaker earnings, driven by fierce price competition in the domestic car market.
Earnings hit by aggressive pricing
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. That was 30% lower than the same period last year. The company said intense price competition among EV brands had weighed heavily on results.
Rivals intensify market battle
The Shenzhen-based automaker now competes with Nio, XPeng, and Tesla. All have cut prices sharply to attract buyers. BYD shares opened lower in Hong Kong on Monday but recovered slightly later in the session.
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, putting further pressure on margins.
Beijing urges caution
Authorities in Beijing warned automakers to curb aggressive discounting, citing risks to the wider economy. Average car prices in China have fallen around 19% over the past two years. They now sit near 165,000 yuan ($23,100; £17,100), according to industry data.
Despite solid international sales, BYD’s earnings fell below analyst forecasts. Expectations of modest growth turned into a significant decline.
Sales targets face challenges
BYD aimed for 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 described the results as “surprising”. She said they show even top companies remain exposed in a cut-throat market.
Wu noted the stock drop reflected investor disappointment. She added that past policies encouraged too many competitors, making competition harder to control. While price cuts benefit consumers today, 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 overemphasised. 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. Strong demand for hybrid vehicles in China, Asia, and Europe has driven much of that growth.
