Shares of Chinese electric vehicle maker BYD dropped by as much as 8% on Monday. The fall came after the company revealed weaker earnings, squeezed by an escalating battle over prices in the auto market.
Quarterly results disappoint investors
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 admitted that aggressive discounting among EV brands had weighed heavily on the sector.
Rivals intensify the fight
The Shenzhen-based manufacturer faces mounting competition from Nio, XPeng, and Tesla. All have slashed prices to attract buyers. BYD’s stock opened weaker in Hong Kong on Monday but regained some ground later in the day.
The company described competition as reaching “fever pitch”. It also criticised excessive marketing, saying it further disrupted the industry. EV makers have turned to subsidies and zero-interest loans, putting margins under severe pressure.
Government urges calm in the market
Authorities in Beijing have called on carmakers to end steep discounting, warning of risks to the broader economy. Average vehicle prices in China have fallen around 19% in the past two years. They now stand near 165,000 yuan ($23,100; £17,100), according to industry figures.
Despite solid overseas demand, BYD’s earnings missed analyst expectations. Many had predicted a modest rise, but results showed a clear decline.
Sales ambitions in jeopardy
BYD set a goal of 5.5 million global sales for 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 performance “surprising”. She said even the strongest player in the industry remains vulnerable in such a cut-throat fight.
Wu said the stock slide reflected investor disappointment. She warned that earlier government policies encouraged too many competitors, fuelling today’s overcrowded market. Lower prices may help buyers now, but Wu cautioned they risk creating long-term oversupply.
Analysts play down concerns
Investment manager Judith MacKenzie of Downing Fund Managers argued the downturn should not be seen too negatively. She said BYD’s rapid rise made a setback unavoidable.
The company has already overtaken Tesla as the world’s largest EV maker, surpassing it in revenue in 2024. Its growth has been driven by strong demand for hybrid vehicles in China, Asia, and Europe.
