Shares of Chinese electric vehicle maker BYD dropped by up to 8% on Monday. The decline followed weaker earnings, pressured by fierce price cutting across the industry.
Quarterly results reveal decline
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. The result showed a 30% fall compared with the same quarter last year. The company admitted that stronger price competition has weighed heavily on the EV sector.
Rivals push harder in crowded field
The Shenzhen-based automaker faces rivals Nio and XPeng, as well as Tesla. All have lowered prices to attract buyers. BYD shares opened weaker in Hong Kong on Monday but regained some ground during the day.
The company said competition had reached “fever pitch”. It also criticised excessive marketing, calling it harmful to the market. Carmakers have relied on subsidies and zero-interest loans, further reducing margins.
Beijing intervenes over discounts
Authorities in Beijing have urged carmakers to stop aggressive price cuts, warning of broader economic risks. Average vehicle prices in China have fallen by about 19% over the past two years. They now stand near 165,000 yuan ($23,100; £17,100), according to industry data.
Despite overseas demand, BYD’s earnings fell short of expectations. Analysts had predicted a modest profit increase, but the company reported a decline instead.
Sales goals under pressure
BYD set a target of 5.5 million global sales this year. By the end of July, it had sold only 2.49 million cars. Prof Laura Wu of Nanyang Technological University in Singapore called the results “surprising”. She said they showed that even leaders in the market remain vulnerable to a cut-throat battle.
Wu said the fall in stock value reflected investor disappointment. She warned that earlier government policies encouraged too many competitors, making the market harder to control. Discounts may help consumers now, but she cautioned they could lead to oversupply later.
Analysts downplay the setback
Investment manager Judith MacKenzie of Downing Fund Managers said the downturn should not be overstated. She argued that BYD’s rapid expansion meant a slowdown was bound to happen.
The company has already overtaken Tesla as the world’s largest EV maker, surpassing it in revenue in 2024. Its growth has been powered by strong demand for hybrid cars in China, Asia, and Europe.
