Shares of Chinese electric vehicle maker BYD dropped by up to 8% on Monday. The decline followed weaker profits, pressured by an intensifying price war in the domestic EV market.
Profit drops sharply
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 heavy discounting among EV makers had weighed on results.
Rivals escalate price competition
The Shenzhen-based automaker faces growing competition from Nio, XPeng, and Tesla. All have lowered prices to attract buyers. BYD shares opened weaker in Hong Kong 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 sector. Manufacturers have offered subsidies and zero-interest loans, squeezing profit margins further.
Beijing urges caution
Authorities in Beijing have called on carmakers to reduce aggressive discounting, warning of risks to the broader economy. Average car prices in China have dropped about 19% over the past 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 under strain
BYD aimed to sell 5.5 million vehicles globally this year. By the end of July, it had delivered only 2.49 million. Prof Laura Wu of Nanyang Technological University in Singapore described the results as “surprising”. She said even leading companies remain vulnerable in a cut-throat market.
Wu noted the share price drop reflected investor disappointment. She added that previous policies encouraged too many competitors, making the market harder to manage. While discounts benefit buyers now, she warned they could create oversupply in the long term.
Analysts see a temporary slowdown
Investment manager Judith MacKenzie of Downing Fund Managers said the setback should not be overstated. She argued that BYD’s rapid growth made a slowdown inevitable.
The company has already overtaken Tesla as the world’s largest EV maker, surpassing it in revenue in 2024. Its rise has been fuelled by strong demand for hybrid models across China, Asia, and Europe.
