Shares of Chinese electric vehicle maker BYD dropped by up to 8% on Monday. The decline followed weaker earnings, pressured by steep discounts across a fiercely competitive market.
Quarterly profits under pressure
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. That marked a 30% fall compared with the same period last year. The company said aggressive price competition among EV brands had weighed on overall results.
Rivals drive prices down
The Shenzhen-based automaker faces rising competition from Nio, XPeng, and Tesla. Each has cut prices to attract buyers. BYD shares opened lower in Hong Kong but recovered some ground later in the session.
The company described competition as reaching “fever pitch”. It also criticised excessive marketing, which it said disrupted the sector. EV makers have relied on subsidies and zero-interest loans, further squeezing profit margins.
Beijing urges restraint
Chinese regulators have called on automakers to halt steep discounting, warning of risks to the broader economy. Average car prices in China have dropped around 19% over two years. Current prices stand near 165,000 yuan ($23,100; £17,100), according to industry data.
Despite strong international sales, BYD’s earnings fell short of analyst expectations. Analysts had predicted modest growth, but the company reported a clear decline.
Sales ambitions face challenges
BYD set a target of 5.5 million global sales this year. By the end of July, it had sold only 2.49 million vehicles. Prof Laura Wu from Nanyang Technological University in Singapore described the results as “surprising”. She said they showed that even market leaders are vulnerable in a cut-throat environment.
Wu said the stock drop reflected investor disappointment. She added that earlier policies encouraged too many competitors, making the sector harder to manage. While price cuts benefit consumers now, she warned they could create long-term oversupply.
Analysts downplay the setback
Investment manager Judith MacKenzie of Downing Fund Managers said the decline 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. Strong demand for hybrid vehicles across China, Asia, and Europe has driven its growth.
