Shares of Chinese electric vehicle maker BYD dropped by up to 8% on Monday. The decline followed weaker profits, pressured by an ongoing price war in the country’s auto market.
Profits decline sharply
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. That represented a 30% fall compared with the same quarter last year. The company said aggressive pricing among EV makers weighed heavily on results.
Rivals cut prices aggressively
The Shenzhen-based automaker faces competition from Nio, XPeng, and Tesla. All have lowered prices to attract buyers. BYD shares opened lower in Hong Kong but recovered slightly later in the day.
The company described the market as reaching “fever pitch”. It also criticised excessive marketing, saying it destabilised the sector. Manufacturers have offered subsidies and zero-interest loans, squeezing margins further.
Beijing urges caution
Chinese regulators have warned carmakers to curb heavy discounting, citing 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 forecasts. Predictions of modest growth turned into a notable decline.
Sales targets under pressure
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 even leading companies remain vulnerable in a cut-throat market.
Wu noted the stock decline reflected investor disappointment. She added that previous policies encouraged too many players, making competition difficult to control. While lower prices help consumers now, she warned they could lead to oversupply in the future.
Analysts see a temporary slowdown
Investment manager Judith MacKenzie of Downing Fund Managers said the decline should not be overstated. She argued that BYD’s rapid rise made a temporary 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 models in China, Asia, and Europe.
